United Kingdom economy grows by 0.4% in the third quarter of 2017

Pound V dollar

Pound V dollar

United Kingdom economic growth picked up in the third quarter of the year to a better than expected 0.4%, according to preliminary figures.

UK GDP has now grown in 19 consecutive quarters.

The bank's decision is seen to on a knife edge, with some on its rate-setting Monetary Policy Committee in favour of an increase in rates from 0.25% to 0.5%, and others opposed.

'With the latest GDP data confirming that the United Kingdom economy is still in a challenging period, these figures are likely to weigh on whether the MPC will raise interest rates next month.

The reading will also be a small boost for under-pressure finance minister Philip Hammond ahead of his annual budget on November 22.

Like nearly every other industry, tech is having to deal with uncertainty around Brexit and sluggish overall growth.

Chancellor Philip Hammond said that they show a "successful and resilient economy which is supporting a record number of people in employment".

According to the ONS, the figures bring the estimated full year growth to 1.5% - meaning that the economy is expanding at a slower rate than in 2016, which stood at an annualised rate of 1.8%.

If that is the case, it will be the first time rates have risen in a decade, with the pound gaining nearly half a cent on the dollar following the release of today's figures.

Darren Morgan, the ONS head of national accounts, said: "Services, led by increases in IT, motor trades and retail, continued to drive GDP growth".

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The 0.4% growth figure represented an improvement on the second quarter's 0.3%.

Services and manufacturing did well during the quarter, up by 0.4% and 1% respectively.

The main contributor to services growth was the business services and finance sector, which increased by 0.6 percent.

In year-on-year terms, third-quarter growth was unchanged at 1.5%, also slightly stronger than analysts had expected.

It helped to counter a lacklustre performance from the construction sector, which fell by 0.7 per cent between July and September - the lowest drop since the third quarter of 2012.

However, the United Kingdom economy is still struggling to bounce back to levels seen in the final quarter of 2016 when GDP rose by 0.7 per cent.

John Hawksworth, PwC's chief economist, said: "These numbers do not change the big picture for the United Kingdom, which is of an economy that has slowed due to higher inflation linked to the weak pound and Brexit-related uncertainty dragging on business investment".

Shilen Shah, Bond Strategist at Investec Wealth & Investment, said: "Third quarter UK GDP accelerated to 0.4%, above the consensus figure of 0.3%, with some indications that the dominant services sector continues to be in expansionary territory".

Shadow Chancellor, John McDonnell, responded: "The UK is not growing as fast as many of our trading partners in the European Union or the US, and it is becoming increasingly clear that this government has to use next month's Budget for a change of direction".

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