Britain’s economy gently picked up speed in the third quarter of the year, official data showed yesterday, strengthening expectations of an interest rate hike next month, despite uncertainty over Brexit.
GDP grew by 0.4 percent in the period, after expanding by 0.3 percent in the preceding three months, the UK Office for National Statistics (ONS) said in a statement.
The data were still only preliminary and are scheduled to be revised and updated next month.
Nonetheless, the government welcomed the figures ahead of its budget for next year, to be delivered in a difficult economic and political context as British business and finance lobby groups push for a transition deal to be signed with the EU before Christmas.
“We have a successful and resilient economy which is supporting a record number of people in employment,” British Chancellor of the Exchequer Philip Hammond said.
The strongest motor of growth was the service sector, which grew 0.4 percent quarter-on-quarter, driven mainly by the finance sector and computer programming activities, the ONS said.
Strengthening industrial production figures also contributed to growth, outweighing a decline of 0.7 percent in the construction sector.
The GDP reading outdid market expectations, which were for growth to match the 0.3 percent figure recorded in the period from April to June.
Analysts said the slight pick-up in growth has increased chances of a rate hike at the next meeting of the Bank of England’s monetary policy committee.
“UK growth is good enough to give the [Bank of England] the green light for a rate rise next Thursday,” Deloitte economist Ian Stewart said.
However, year-on-year growth in the third quarter was only 1.5 percent, below the 1.8 percent rate recorded over the whole of last year.
Hargreaves Lansdown economist Ben Brettell described the figure as “lackluster.”
“Brexit-related uncertainty is the obvious scapegoat — and it’s played a part, discouraging business investment and causing a spike in inflation,” he said.
Although unemployment is at a 42-year-low, slow wage growth and inflation of about 3 percent are weighing on consumer purchasing.
Meanwhile, businesses have said they are delaying investment due to Brexit uncertainty.
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