UK economy grows faster than expected

UK gross domestic product (GDP) increased by 0.6 per cent in the third quarter of 2011, the latest figures from the Office for National Statistics (ONS) have revealed.

Growth had previously been forecast at a rate of 0.5 per cent over the same period. According to the statistics, service industries saw the largest growth of 0.7 per cent, while production, manufacturing and construction also saw increased output.

In addition, the figures show that real household disposable income rose by 0.3 per cent in quarter three of 2011.

Meanwhile, in a separate publication, ONS figures show that business investment increased by an estimated 0.3 per cent compared to the previous quarter, driven mainly by private sector manufacturing.

The rate the UK economy will grow over the next few months is dependent on the Eurozone, according to Howard Archer, chief economist at Global Insight, who said: "Indeed, the UK is far from immune to problems in the Eurozone, so if the region's sovereign debt crisis situation fails to improve or even worsens, the UK could see even weaker economic activity than we currently project."

"On the assumption that significant progress is ultimately made in dealing with the Eurozone crisis and tensions gradually ease, we see the UK economy returning to modest growth in the second half of 2012 helped by sharply moderating inflation easing the squeeze on consumers' purchasing power, extended accommodative monetary policy and gradually improving global growth. The holding of the Olympics should also give the economy a modest boost in the third quarter."