Economists are playing down the strongest UK growth figures in five years as gross domestic product increased by 1 per cent in Q3 to propel the country out of double-dip recession.
Office for National Statistics data shows the UK has ended three quarters of negative output including a 0.5 per cent fall in in Q2.
Business services and finance accounted for a third of all growth, increasing by 1 per cent compared to a flat Q2 while the total service industries grew by 1.3 per cent after a 0.2 per cent fall in Q2.
The only black mark was a 2.5 per cent fall in construction output after falls of 3 per cent and 5.9 per cent in the last two quarters.
Prudential Portfolio Management Group investment director Andy Brown says: “Investor sentiment reacts to good news like this much more slowly than it does to bad news, such as economic signs of a downturn. We are in a trendless but volatile period so celebration at this point may be an overreaction.”
J.P. Morgan Asset Management global strategist Tom Elliott says “The qualifications include the flattering comparison against a Q2 that included the Queen’s diamond jubilee holiday, which depressed spending, and the inclusion in the Q3 numbers of large one-off contributions from TV Olympic broadcasting rights and Olympic ticket sales.”
Chancellor George Osborne has urged caution, saying there is still a “long way to go” but the Government is on the “right track”.
He said: “By continuing to take the tough decisions needed to deal with our debts and equip our economy for the global race we’re in, this Government is laying the foundations for lasting prosperity.”
Shadow chancellor Ed Balls said: “These figures show that underlying growth remains weak and that our economy is only just back to the same size as a year ago.”