Money (2)

The UK economy grew by 0.5% in the third quarter of 2015, the Office for National Statistics (ONS) has said.

In comparison, the economy grew 0.7% between April and June and it falls below the 0.6% figure predicted by market experts.

Output increased in three main groups within the economy. Services increased by 0.7%, production increased by 0.3% and agriculture increased by 0.5%. Construction output has decreased by 2.2%.

Compared with the same quarter last year, GDP is 2.3% higher between July and September.

All of the main service industries grew during the last month. The sector, which accounts for roughly 70% of UK GDP, is estimated to have grown by 2.8% in the year to August. The largest contributions to services growth came from business service and finance, which increased by 1.4%, and distribution, hotels and restaurants, which contributed a 0.7% rise.

Jeremy Cook, chief economist at World First, said: “Once again, the UK is growing solidly but not spectacularly and concerns must be that if inflation rises without a subsequent pull higher in wages then the consumption engine may begin to sputter.

“The recovery has been characterised by a divergence in fortunes of the manufacturing and services sectors. Today’s data only reinforces this problem with manufacturing contracting by 0.3% and services expanding by 0.7%. We are still seeing a ‘Strowl of the Shoppers’ more than a ‘March of the Makers”.

ONS chief economist Joe Grice, said: “While growth has slowed from the previous quarter, the economy overall is still expanding steadily. However, the sectoral pattern is mixed. Growth in the services sector has been robust but both manufacturing and construction output have shown falls.”

James Sproule, Chief economist at the Institute of Directors, said: “Although today’s figures undershot expectations, the news is still broadly positive.

“The challenge now for the UK is to achieve sustainable growth which is based on improving productivity. Demographic trends and technological change mean that businesses will have to be agile to respond quickly to changing consumer demand to find the kinds of productivity gains in the future which we have been used to in the past.”

Also, Rain Newton–Smith, CBI Director of Economics, said: “These GDP figures show momentum continuing in the UK economy.

“As we approach the Spending Review and Autumn Statement, it is vital that the government protects areas of spending which will support the ratcheting up of UK productivity, helping to underpin sustainable public finances.”