UK Q3 GDP unrevised at +0.8 pct, household, govt spending slows

Published 11/24/2010, 04:39 AM
Updated 11/24/2010, 04:44 AM

LONDON, Nov 24 (Reuters) - Britain's economy grew 0.8 percent in the third quarter of this year, official data confirmed on Wednesday, boosted by net trade which made its biggest contribution to growth in two years.

The Office for National Statistics said its second estimate of growth between July and September also confirmed the economy expanded by 2.8 percent over the period compared with a ye ar ago.

The ONS said net trade contributed 0.4 percentage points to growth over the quarter, the biggest contribution since the end of 2008, as exports grew faster than imports.

While the figures may reassure policymakers that the past depreciation of the pound is helping to rebalance the economy, the recovery still faces headwinds from deep government spen ding cuts which will kick-in in earnest from next year.

As such, Wednesday's figures are unlikely to alter the view that the Bank of England will keep interest rates at their record low of 0.5 percent for many more months to come.

Indeed, a breakdown of the data showed that household spending growth slowed to 0.3 percent from 0.7 percent in the second quarter, while government spending -- which has so far hel ped to prop up the recovery -- grew by just 0.4 percent in Q3, less than half the pace of the second quarter.

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