Exports boost UK economy as investment spend slows
BRITISH export growth helped the economy extend its recovery in the third-quarter as growth in consumer, government and investment spending slowed by more than half.
Gross domestic product rose 0.8pc from the previous three months, when it increased 1.2pc, the Office for National Statistics said yesterday in London.
Exports rose 2.2pc after a 2.3pc increase in the previous three months.
Momentum in the economy may wane as the government implements the biggest budget squeeze since World War Two and strains in Ireland, the UK's fifth-biggest export market, and the euro area deepen.
The outlook has divided Bank of England policymakers as they debate whether to expand bond purchases or raise the key interest rate to tame inflation.
"The economy has to get past the fiscal tightening next year and there's a high degree of uncertainty on how 2011 will unfold," said Philip Shaw, chief economist at Investec Securities in London. "The news on exports is encouraging, but we've had false dawns before."
Consumer-spending growth slowed to 0.3pc in the third-quarter from 0.7pc in the previous three months, the statistics office said. Government spending rose 0.4pc, down from 1pc, and investment growth eased to 0.6pc from 1.4pc.
Imports rose 0.7pc and net trade contributed 0.4 percentage points to GDP. Inventories added 0.1 percentage points.
A separate report showed business investment fell 0.2pc in the third-quarter from the previous three months.
It was up 4.6pc from a year earlier. An index of services in September rose 0.6pc from the previous month.
The euro-area economy is also cooling. GDP growth slowed to 0.4pc in the third-quarter from 1pc in the previous three months.
In the US, where the Federal Reserve pledged this month to buy $600bn (€448bn) in Treasury securities, growth was an annual 2.5pc in the third-quarter, data yesterday showed.
While that was above an initial estimate, it has not been enough to bring down an unemployment rate hovering near 10pc.