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Economic growth weaker than thought

The strength of Britain's economy as it enters the age of austerity has been cast into doubt after official figures downgraded growth for the first nine months of the year.

Gross domestic product (GDP) growth for each of the first three quarters in 2010 was revised down by 0.1%, the Office for National Statistics (ONS) said.

The third quarter - between July and September - saw growth of 0.7%, down from 0.8%, while second quarter figures were revised down to 1.1% from 1.2%. The first quarter saw growth of 0.3%, down from 0.4% in the previous estimate.

While there are still signs of robust growth in the UK, economists said the figures do little to improve prospects for the economy next year - and its ability to withstand the Government's tough deficit-busting spending cuts.

But there is a more upbeat outlook on the other side of the Atlantic, where US GDP growth in the third quarter has been revised up to 2.6% on an annual basis from 2.5% in previous estimates, although the revision is lower than expected.

Commenting on the UK figures, Vicky Redwood, senior UK economist at Capital Economics, said: "The upshot is that a continued strong recovery seems far from assured."

Chancellor George Osborne unveiled an £81 billion package of spending cuts - leading to hundreds of thousands of job losses - earlier this year to tackle the creaking public finances. Mr Osborne has pinned his hopes on the private sector picking up the expected slack in the economy and holding off a double-dip recession.

The GDP revisions come after the ONS downgraded construction sector growth, as previously revealed, across the first three quarters of 2010. In the third quarter, there were further downward revisions to production industries and business services and finance.

Household expenditure remained unchanged in the third quarter - showing a 0.3% rise - driven by spending on recreation and culture, food and non-alcoholic drinks. Government spending fell by 0.4%, the lowest level since the first quarter of 2009.

Howard Archer, chief UK and European economist at IHS Global Insight, said the figures are "disappointing", and added: "We expect growth to lose significant momentum over the coming months as fiscal tightening increasingly bites and adds to the pressures on already stretched consumers."

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