Double boost for recovery plans
Published 26/10/2010 | 13:32
Chancellor George Osborne's recovery plans have received a welcome boost with better than expected third quarter growth figures and a crucial upgrade for the UK economy.
Gross domestic product (GDP) grew by 0.8% between July and September - less than the 1.2% surge in the previous three months, but double the growth predicted by most economists.
The data eases fears of a double dip recession and will reinforce Government hopes that the private sector will pick up the slack created in the economy by mammoth public spending cuts.
Ratings agency Standard & Poor's added to the cheer by revising its outlook on the UK to stable from negative and confirming the UK's AAA rating.
Mr Osborne welcomed what he called a "double dose of good news" for the economy. He said: "What you see today, in an uncertain global economic environment, is Britain growing, growing strongly, the strongest growth we have seen in this part of the year for a decade, and also our country's credit rating being secured."
The pound surged after the third-quarter figures from the Office for National Statistics (ONS), rising against the dollar and pulling back from recent six-month lows against the euro.
Sterling's bounce back comes as experts believe the surprisingly robust figures mean any further money-boosting efforts from the Bank of England will continue to remain on hold.
But they remain sceptical the UK can maintain its growth momentum as the austerity cuts kick in, while the figures are only a preliminary estimate and may be subject to change.
Economic growth over the past six months has now hit 2%, which is the fastest pace of expansion seen over two consecutive quarters for 10 years, according to the ONS.
It said that allowing for a bounce back in the second quarter following the bad weather at the start of the year, the underlying growth between July and September was actually similar to that of the second quarter.