By Daniel Hunter
The UK economy grew by 0.7% in the three months to the end of September, according to the Office for National Statistics (ONS).
It compares to growth of 0.9% in the second quarter and 0.7% in the first. Here is what several leading economists thought of the latest data.
John Hawksworth, PwC’s chief economist, said: "As we and other forecasters had expected, UK GDP growth slowed to 0.7% in the third quarter, but continued to grow at slightly above its long-term trend rate. The slowdown reflects the drag on UK export growth from renewed stagnation in the eurozone, together with slower retail sales growth over the summer. But the business services, transport and communications sectors continued to show strong growth in the third quarter.
“Overall, these figures reinforce our view that UK growth will be around 3% this year, but is likely to slow to nearer 2.5% in 2015 as the eurozone remains sluggish and the housing market cools. But this will still be one of the best growth performances in the G7 in 2015, behind only the US and possibly Canada, following the UK's chart-topping results in 2014.
“Total UK GDP is now around 3.4% higher than its pre-recession peak in Q1 2008, but we should remember that the population has also grown by around 4.5% over this period. Average GDP per person is therefore still around 1% lower in real terms than before the recession, which helps to explain why many people may feel that there is some way to go before the downturn is truly over."
Andy Scott, associate director at HiFX, said: “Today’s GDP growth figures were in-line with expectations but sterling gained after the release which indicates the market was concerned by the potential for them to come in lower, and was relieved when they didn’t.
“Whilst the economy cooled in Q3, growth was still solid. The bigger concern I think lies in the current quarter where we’re starting to see a slightly more pronounced slowdown as external weaknesses weigh on areas such as manufacturing.
"We also have slowing house price growth which may result in a more cautious consumer, affecting domestic demand and we know that price pressures are diminishing which will keep the Bank of England on hold for longer.
“Overall, in comparison to our Eurozone neighbours we are in much better shape in terms of the economic outlook, but there are concerns nevertheless and sterling’s upwards momentum could well slow with the economy.”
Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management, said: “Today’s figures will act as a soothing balm for investors following a raft of more negative news in recent weeks, and especially after the disappointing growth headlines we have seen around the world recently. These GDP figures bode well for UK risk assets.
"UK company earnings will be buoyed by this UK GDP reading, but only in part. These figures set the foundation for domestically focussed companies, but nearly half the market is internationally orientated. This means the broader global economy, and the trends of commodity prices and disinflation, are just as — if not more — important than UK GDP for investors.”
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