Boost for economy as third quarter growth revised up

Britain's current account deficit grew to �25.5 billion in the third quarter
Britain's current account deficit grew to �25.5 billion in the third quarter

The UK economy was enjoying some Christmas cheer after growth was revised up in the third quarter.

The Office for National Statistics said gross domestic product (GDP) expanded by 0.6% in the third quarter, up from a previous estimate of 0.5%, showing further resilience to uncertainty surrounding the Brexit vote.

The move was driven by a hefty revision to output from the business services and finance industries, which was revised up from 0.3% to 0.8% for the third quarter.

Separate figures for Britain’s powerhouse services sector, which accounts for around 79% of the UK economy, saw output grow by 0.3% between September and October.

Darren Morgan, ONS head of GDP, said: “Robust consumer demand continued to help the UK economy grow steadily in the third quarter of 2016. Growth was slightly stronger than first thought, though, due to greater output in the financial sector.

“New figures on services also suggest that growth in that predominant sector of the economy continued into October, helped in large part by another strong showing from the retailers.”

Amid the slew of economic data from the ONS, business investment was revised down to 0.4% from 0.9% for the third quarter, while household spending rose by 0.7% - or £2.1 billion - between July and September.

Britain’s current account deficit - measuring the amount of money flowing in and out of the economy - grew to £25.5 billion in the third quarter, up from a revised deficit of £22.1 billion for the quarter before.

While it came in lower than economists’ predictions of £28.2 billion, it will do little to dampen the concerns about Brexit uncertainty hampering the inflows of financial capital from abroad to finance the deficit.

Bank of England governor Mark Carney warned in the lead-up to Britain’s referendum on the European Union that the nation relied on the “kindness of strangers” in order to finance the country’s needs.

It was hoped that the plunge in the value of the pound since the Brexit vote would bolster exports by making UK goods cheaper on the world market.