UK economic recovery gathers pace as GDP jumps 0.8%

25th October 2013

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Britain’s economic recovery has accelerated as official figures show GDP rose by 0.8% in the three months to September.

According to the Office for National Statistics there has been a “fairly strong” performance across all sectors.

The latest figure builds on the 0.7% economic rise between April and June, and is the best quarterly performance since 2010.

Healthy GDP growth in the third quarter reinforces the belief that the Bank of England is highly unlikely to change its monetary policy stance at its November policy meeting or for some considerable time to come after that says Dr Howard Archer chief European & UK economist
at IHS Economics & Country Risk.

He says:The bar for any more Quantitative Easing now looks to be very high, and it will likely only occur if the economy loses substantial momentum over the coming months, or if there is major financial turmoil and a sharp upward move in market interest rates after the US Federal Reserve starts to taper.

“Meanwhile, any change in interest rates is clearly a long way off whether or not unemployment ends up falling more rapidly than the Bank of England currently expects. The Bank of England has made it clear that given the past extended weakness of the economy and the low base that growth is coming from, it wants to give the economy every chance to develop sustained, decent expansion.”

Nancy Curtin, chief investment officer, Close Brothers Asset Management says: “We now have further confirmation that the UK has shaken off the last vestiges of economic stagnation, placing George Osborne in a position of strength ahead of the Autumn Statement. With a strong reading from Q3 GDP, we can look forward to further growth, leaving previous fears of a triple dip recession firmly in the shadows and undermining any further calls for more QE. The labour market is improving, and consumer confidence should continue to pick up. With this in mind, we expect to see investors’ faith in domestic stocks grow even stronger – particularly in mid-caps, who have been able to exploit the economic upswing this year.”

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