Consumer spending and business investment picked up in the third quarter of the year to help accelerate growth in the economy, according to official figures.
In its second estimate of gross domestic product (GDP) for the three months to September, the Office for National Statistics (ONS) maintained its earlier reading of 0.4% growth.
It marked a slight increase on the 0.3% achieved in the two previous quarters – with the annual rate still at 1.5%; in line with the Office for Budget Responsibility’s downgrade to the country’s growth path in Wednesday’s Budget.
The pick-up was largely driven by household spending, despite the squeeze on budgets from inflation outpacing wage growth, growing by 0.6% quarter-on-quarter.
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That was up from 0.2% between April and June.
The ONS noted a “modest recovery” in transport spending including car sales despite the industry reporting a slump in demand throughout much of the year since car tax changes were brought in.
It also pointed to business investment growth but said it remained subdued.
ONS statistician, Rob Kent-Smith, said: “GDP growth in the third quarter remains similar to that seen in the first half of 2017, with professional activities, which include employment agencies and accountancy, providing the biggest contribution to growth this quarter.
“Household spending strengthened after a weak second quarter.
“Spending on transport, which includes cars, is contributing to growth this quarter, having driven the weakness in quarter two after changes to vehicle excise duty led people to bring forward their car purchases to quarter one.”
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The ONS delivered its update as the country approaches the festive season holding a double-edged sword.
While the economy – and retailers particularly – would like stronger consumer spending there are fears among financial system regulators about unsecured borrowing running out of control.
The total of £200bn is currently growing at an annual rate just shy of 10%. The Bank of England acted earlier this month to help cool inflation by raising borrowing costs in the form of an interest rate rise – the first for a decade.
In the run-up to Black Friday, the CBI released the findings of a survey suggesting retail spending rose in the year to November following a significant dip the previous month, while card provider MBNA predicted a record £5.5bn spend over the course of the weekend.