UK economy makes surprise growth

The latest figures have eased fears of a double-dip recession triggered by severe spending cuts [Reuters]

Britain’s economy grew by 0.8 per cent in the third quarter of this year, figures reveal, twice as fast as analysts had predicted.

Tuesday’s date from the Office of National Statistics follow an expansion of 1.2 per cent in the second quarter, when the economy’s growth rate hit a nine-year high.

Analysts had initially forecast growth of 0.4 per cent on the quarter.

Output in the country, which has pulled through its worst recession in decades, is now 2.8 per cent higher than a year ago.

“UK growth provided a major upside surprise in the third quarter,” Howard Archer, an economist at the IHS Global Insight consultancy in London, told the AFP news agency.

“Construction output surged by four per cent quarter-on-quarter and 11 per cent year-on-year as it extended the surge in activity seen in the second quarter.”

Improved credit rating

There are hopes that the positive figures will stave off a double-dip recession that had been predicted by some analysts.

It comes a week after the UK government unveiled the country’s severest spending cuts since the second world war in an effort to curb the national deficit.

There are fears that the move could stifle the country’s economy.

But on Tuesday the credit ratings agency Standard & Poor gave the move its vote of confidence, lifting Britain’s credit rating from “negative” to “stable”.

“The decisions reached by the United Kingdom coalition government … reduce risks to the government’s implementation of its June 2010 fiscal consolidation programme,” the agency said.

“We have accordingly revised the outlook on the United Kingdom to stable from negative. We have also affirmed the ‘AAA/A-1+’ sovereign credit ratings on the United Kingdom,” it said.