Europe Economy

UK GDP Grows at Fastest Rate in 3 Years in Third Quarter

Reuters
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Britain's economy grew more than  expected in the third quarter and at its fastest annual rate in more than three years, official data showed on Friday, suggesting the economy held up well during the credit crunch.

The Office for National Statistics' first estimate  showed GDP grew by 0.8 percent in the July to September period,  above forecasts for a slowdown to 0.7 percent from 0.8 percent  in the second quarter.

The annual rate of growth accelerated to 3.3 percent from  3.1 percent in the second quarter, well above analysts'  expectations for a steady reading and the strongest rate since  the second quarter of 2004.

The figures are likely to reinforce expectations that  the Bank of England will be in no hurry to cut interest rates  as policymakers wait to see how financial market turmoil will  affect the wider economy.

Pressure had been mounting on the BoE to follow the U.S.  Federal Reserve in cutting interest rates to protect against any  prolonged slowdown stemming from market turbulence.

But the ONS said the services sector growth accelerated in  the July to September period to 1.0 percent, driven by  the distribution, hotels and restaurants sector -- which  includes retail -- and transport, storage and communication.

That took the annual services growth rate to 4.0 percent --  the fastest pace of growth since the second quarter of 2004.

Retail sales have been surprisingly strong recently despite rising borrowing costs and a global lending squeeze which has raised fears over the outlook for economic growth and triggered  the first run on a British bank in more than a century.

However, total production growth slowed sharply to just 0.2 percent on the quarter from 0.7 percent, mainly due to much  weaker manufacturing output.