All main sectors of the economy grew. The pace of expansion slowed however, from 0.9% in the second quarter, to 0.7% in the third quarter, with fears mounting that recovery could be knocked further off course by a weak eurozone economy and rising uncertainty in global markets. Here, some of the UK’s economists and commentators respond to the GDP figures from the Office for National Statistics.
Rob Carnell, ING
UK third-quarter GDP has come in at a very respectable 0.7% quarter-on-quarter, taking the year-on-year growth rate to 3% – in line with market expectations. The chancellor may view this as a mixed blessing, after being given a bigger bill for the EU budget thanks to the UK’s relative outperformance of its EU peers.
This will be especially irksome since despite the stronger growth figures, there has not yet been an accompanying improvement in the UK public finances to match. Furthermore, despite this good growth performance, recent UK data has been a bit less upbeat.
Frances O’Grady, TUC general secretary
It’s a tale of two economies – a few people at the top are thriving, but most workers’ wages are still in decline. This kind of growth is fragile because businesses can’t keep prospering if their customers have less money to spend. George Osborne needs a clear strategy for a wages-led recovery or it will be the deficit that continues to grow while the economy runs out of steam.
Howard Archer, IHS Global Insight
The government will likely see growth of 0.7% quarter-on-quarter in the third quarter as still offering support to its handling of the economy. The government will be fervently hoping that growth holds up well as the May 2015 general election draws ever nearer, and it will be particularly hoping that earnings growth picks up and inflation remains low so that an increasing number of voters feel that their living standards are improving.
Samuel Tombs, Capital Economics
The preliminary estimate of Q3 GDP shows that the UK’s economic recovery has broadly maintained its momentum despite a weak global environment and the stronger sterling exchange rate.
Admittedly, recent sharp falls in equity prices, growing signs of renewed stagnation in the eurozone and some softer manufacturing surveys have intensified concerns that the recovery will lose pace in the fourth quarter. But the UK economy has shown on several occasions in the past that it can outperform the rest of Europe for sustained periods.
Felicity Burch, manufacturing trade body EEF
Today’s estimates confirm the economy has slowed, with little surprise that export-intensive sectors have been most affected. After strong growth in the first six months of the year, the pace of growth in manufacturing has also slackened as a result of weaker demand from key markets including Europe and China.
Nonetheless, the domestic economy remains relatively upbeat, and manufacturing sectors with strong exposure to the UK should do particularly well. Manufacturing is still on track to grow at its fastest pace since 2010.
David Kern, British Chambers of Commerce
It is disappointing that GDP growth slowed in the third quarter, but not surprising in view of recent data. But it is important to put this slowdown into context; the economy is still growing at a satisfactory pace and we are expanding more rapidly than most other G7 economies.
At the same time, we cannot ignore the fact that our economy is facing major challenges. We have unsustainable twin deficits – both on the budget and on the current account, and the problems being felt by our major trading partners in Europe are adding to the difficulties facing our exporters.
Alan Clarke, Scotiabank
The first estimate of third quarter GDP was bang in line with expectations at 0.7% quarter-on-quarter. That may be down on 0.9% quarter-on-quarter during Q2, but it is not a bad reading by any stretch of the imagination. A 2.8% annualised growth rate is very respectable and still above trend.
The most surprising aspect of the report was construction, which showed a 0.8% improvement. The other area that was noteworthy was business services which saw 1% quarter-on-quarter growth after 1.5% quarter-on-quarter in Q2. That is a pretty weighty sector and the deceleration isn’t great news.
John Allan, Federation of Small Businesses
Today’s GDP figures reflect that small businesses are continuing to grow and take on new staff. The rate of growth is moderate, and it is clear that steady progress will only continue if government does everything it can to create an environment that small businesses can thrive in. It needs to focus on enabling more small firms to export and press ahead with banking reforms so businesses can get the finance they need. That that’s what is required for firms to grow and boost the UK economy further.
