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‘Goldilocks’ UK sees Q3 GDP growth slow to 0.7%

Dan Jones
Written By:
Dan Jones

UK GDP growth stood at 0.7% in the third quarter, according to the Office for National Statistics (ONS), down from 0.9% in Q2 but in line with economists’ expectations.

Publishing its preliminary estimate for growth for the three months to 30 September, the ONS added year-on-year growth stood at 3% over the period – also as expected.

Quarterly growth was broad-based, with all four main industrial groupings seeing growth. Output increased by 0.7% in services, by 0.5% in production, 0.8% in construction and 0.3% in agriculture.

In terms of their contribution to the overall growth rate, growth was once again dominated by the services sector, which provided 0.58 percentage points of the 0.7% headline figure.

Services also remains the only sector in which output is above its pre-crisis, Q1 2008 peak, the ONS added.

Despite the slowdown from Q2 figures, economists suggest today’s data reflects positively on the economy, particularly at a time when the eurozone – the UK’s largest trading partner – continues to struggle.

“In many ways the UK is proving to be the archetypal ‘goldilocks economy’ – not too hot and not too cold. Growth is relatively strong, but inflation remains subdued, which allows the Bank of England to provide continued support via ultra-low interest rates,” said Ben Brettell, senior economist at Hargreaves Lansdown.

The pound strengthened slightly against the dollar to $1.6066 following the release, suggesting traders had been nervous of a weaker figure following underwhelming recent PMI data.