UK economy grows at fastest pace in two and a half years

UK economy expands at fastest pace

The UK economy grew by zero point seven percent in the third quarter, its fastest expansion in two and a half years, the Office for National Statistics reported.

Growth matched despite energy pressures

The quarterly growth rate matched economists' expectations and was the fastest recorded since the first three months of twenty twenty-four, when GDP also rose by zero point seven percent.

Services sector drove the expansion

The Office for National Statistics said the economy grew robustly in the July to September quarter, almost entirely due to strong and widespread growth in the services sector.

September growth beat forecasts

The economy grew by zero point two percent in September, beating forecasts of zero growth in the month, though the ONS revised down August growth from zero point one percent to zero.

Energy prices remained elevated

Oil prices rose above one hundred dollars a barrel in September and remained above that threshold until earlier this month. Natural gas prices were about three times the level in February.

Wholesale electricity prices doubled

Wholesale electricity prices were about double the level of a year ago. Automotive fuel prices also remained elevated, reflecting continued pressures in global energy markets.

Chancellor hails standout resilience

Chancellor John Healey said the UK was showing standout resilience. He added that the economy was growing at the fastest rate in almost ten years, excluding the Covid-nineteen pandemic period.

“the UK was showing "standout resilience"”

Year-to-date growth outpaces expectations

GDP is up one point eight percent so far this year and pushing at an annualised pace of just above two point five percent, marking the best first three quarters since the pandemic rebound.

UK loses fastest-growing title to US

Compared to its G seven peers, the UK has relinquished its title as the fastest-growing economy this year to the US, but only just, according to Deutsche Bank's chief UK economist.

Services sector rose zero point nine percent

The services sector rose by zero point nine percent in the third quarter.The production sector grew by zero point one percent, while construction fell sharply despite accounting for only about six percent of economic activity.

AI investment driving services growth

Suren Thiru, chief economist at the accountancy body ICAEW, said investments in artificial intelligence were driving the expansion of services sector activity during the third quarter.

Households drawing on savings

Businesses ramped up investment amid an AI boom, while stronger consumer spending suggests households continued to draw on savings to support consumption despite rising inflation.

Budget forecasts already out of date

The Office for Budget Responsibility said at the time of the budget in November that it expected the economy to expand by one point two percent this year, which already looks out of date.

Bank of England raises rates to four percent

Policymakers at the Bank of England voted last week to raise interest rates by a quarter of a percentage point to four percent to cool inflationary pressures in the economy.

Fuel prices push inflation higher

Inflation has risen this year mostly in response to higher motor fuel prices, which in the UK have pushed the cost of petrol above one pound seventy pence a litre and diesel towards an average…

December rate rise remains on table

Analysts said the strength of the economy could persuade the Bank of England to raise rates when policymakers meet again in December, as robust figures reinforce views that the economy remains resilient.

“These robust figures help keep a December interest rate rise firmly on the table”