Bank of England
Growth of 0.6 per cent was recorded for the July to September period, up from 0.4 per cent in the previous quarter and 0.1 per cent in the first three months of the year. The latest figures mark the fastest quarterly growth since the last three months of 2016 when it measured 0.7 per cent, said the Office for National Statistics. They also mean year-on-year growth sped up to 1.5 per cent, compared to 1.2 per cent in the April to June period.
Chancellor Philip Hammond, whose recent Budget announced public finances were in a much stronger state than expected, declared: “Today’s positive growth of 0.6 per cent is proof of the underlying strength in our economy.
“We are building an economy that works for everyone with 3.3 million more people in work, lower unemployment in every part of the country, and wages rising at their fastest pace in almost a decade.
“Now our focus is on locking in this progress and ensuring people’s wages can continue to rise.
“That is why my Budget supports hardworking families by cutting taxes for 32 million people, provides more funding for public services, including a record-breaking funding increase for our vital NHS, and invests in our future with more money for transport and digital technology.”
Latest figures show fastest quarterly growth since the end of 2016
Strong retail sales during the football World Cup and heat wave, and a recovery in construction in July were the main factors behind the growth boost, which was in line with expectations of the Bank of England and economists.
Meanwhile the Government has announced 11 overseas investment deals worth a total of £109million.
They are expected to create 359 high tech, advanced engineering and banking jobs in London, Leeds, Newcastle and Reading.
They were secured with help from Liam Fox’s Department for International Trade, which is working to boost Britain’s global trade links, exports and foreign investment in the UK as Britain prepares to regain control over over its trade policies after Brexit.
British Chancellor of the Exchequer Philip Hammond and the 2018 Budget
Several of the new investments come from fast-growing Asian and Latin American markets including India, Brazil and Argentina as well as the United States.
Dr Fox said: “It’s easy to see why the UK is Europe’s top destination for foreign direct investment.
“Our country is home to world leading research and development capability, as well as a culture of innovation.
“My international economic department has a network of Trade Commissioners operating across the world, seeking investment opportunities that will help create jobs and improve the lives of people in the UK.
“As we celebrate the Lord Mayor’s Parade in the City of London, today’s announcement is further evidence that the UK is one of the most attractive places in the world to invest and demonstrates a vote of confidence in our economy and our people.”
The new deals include digital, artificial intelligence and information technology developments.
Dr Fox’s department also yesterday announced £345million in UK Export Finance support for UK firms to build three new hospitals and upgrade two power stations in Angola.
“This is a great example of how our ambition to grow exports is helping British businesses break into overseas markets,” said Trade Minister Baroness Fairhead.
The projects include a Mother and Child Hospital and a general hospital to be built by the UK branch of international construction firm ASGC.
The IQA Group based in Paisley, Scotland, with a Spanish parent company, is celebrating its first international contract, to upgrade two power stations which will significantly reduce Angola’s reliance on oil-generated energy and improve citizens’ access to electricity.
Yesterday’s ONS figures showed construction and manufacturing output picked up in the third quarter of 2018 after a weak start to the year thanks to bad weather.
Increased car-making contributed to narrowing the gap between Britain’s exports and imports, though new car sales in September were hit by new emission regulations restricting supply.
Trading information at the London Metal Exchange Ltd. (LME)
Household spending was also up, though the dominant services sector grew only 0.3 per cent and business investment shrank by 1.2 per cent, blamed on uncertainty about whether the UK will be able to strike a good Brexit deal with Brussels in time for leaving the bloc on March 29.
Some economists also believe the economy has peaked for the year, after a strong July was followed by no extra growth in August and September, and the pound was largely unmoved by the ONS bulletin.
Rob Kent-Smith, head of national accounts at the ONS, said: “The economy saw a strong summer, although longer term economic growth remained subdued.
“There are some signs of weakness in September with slowing retail sales and a fall-back in domestic car purchases.
“However, car manufacture for export grew across the quarter, boosting factory output.
Mark Carney, governor of the Bank of England (BOE), second left, speaks during the bank’s quarterly
“Meanwhile, imports of cars dropped substantially, helping to improve Britain’s trade balance.”
The Bank of England’s latest report predicted growth will drop back to 0.3 per cent in the final months of this year before rising again to steady at 0.4 per cent.
The National Institute of Economic and Social Research expects the economy to expand by 0.4 per cent between last month and the end of the year, more in line with Britain’s post-financial crisis average.
Forecasting chief Amit Kara added: “The outlook for growth is particularly uncertain, especially with the exit date from the European Union fast approaching and the terms of the future relationship yet to be settled.”
BREXIT: British pounds and Euros
The EY ITEM club has a gloomier prediction of 0.3 per cent growth in the last quarter of this year, resulting in overall GDP expansion in 2018 of 1.3 per cent, a nine-year low.
However, chief economic advisor Howard Archer added: “We forecast GDP growth to strengthen to 1.5 per cent in 2019, supported by a gradual improvement in consumer purchasing power and modestly firmer business investment as a UK-EU transition arrangement is assumed to come into effect in March.”
He noted that despite a “worrying” drop in business investment in the third quarter, overall investment expanded 0.8 per cent compared to the previous three months, helped by a marked increase in Government investment.
“Net trade made a substantial contribution of 0.8 percentage point to third quarter GDP growth having been a substantial drag in the second quarter.
The City of London, global financial hub
Exports of goods and services rebounded 2.7 per cent quarter-on-quarter in the third quarter after a drop of 2.2 per cent in the second quarter,” he noted.
“Consumer purchasing power should benefit as inflation is seen averaging a reduced 2.1 per cent in 2019 while earnings growth is expected to trend up gradually.
“Meanwhile business investment may be supported by some firms looking to increasingly invest in automation to make up for labour shortages and try to boost productivity.”
Suren Thiru, head of economics at the British Chambers of Commerce, warned: “It remains likely that the stronger growth recorded in the third quarter is a one-off for the UK economy, with persistent Brexit uncertainty and the financial squeeze on consumers and businesses likely to weigh increasingly on economic activity in the coming quarters.”