UK GDP growth slows to 0.7% in third quarter

UK GDP growth in the third quarter slowed to 0.7%, which translates into an annual increase of 3%, according to data published on Friday by the Office for National Statistics. In the second quarter the British economy had expanded by 0.9%.

Most economists in Western Europe and North America had expected Q3 2014 GDP growth to come in at 0.7%.

The services sector, which represents more than seventy percent of the UK’s economy, grew by 0.7% in the third quarter, which was less than the second quarter’s 1.1%.

Agriculture was 0.3% up, construction rose by 0.8%, and industrial production by 0.5%. Manufacturing grew at its slowest pace in nearly eighteen months.

These latest figures will add to concerns that the economic recovery is losing momentum and has succumbed to the Eurozone’s slowdown.

Despite the marginally weaker performance in the third quarter, the UK is still likely to be the most rapidly-growing advanced economy this year.

Chancellor George Osborne

With soaring government borrowing, Chancellor George Osborne has very little wiggle room for a pre-election spending boost.

At the end of September 2014, GDP was estimated to have been 3.4% bigger than in Q1 2008 (pre-economic downturn peak). From Q1 2008 to Q2 2009, UK GDP contracted by 6%.

The slowdown in economic growth will add to the Conservative Party’s task of convincing electors that its policies are the best in next year’s general election.

The ruling Tories’ (Conservatives’) hope the country’s strong economic rebound will keep them in power. However, Labour lawmakers point out that over the last few years wages have failed to keep up with inflation, i.e. workers’ purchasing power has declined.

Economists expect fourth-quarter growth to come in at 0.6%.