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Recovery appears to be taking root

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Official figures have revealed that the UK economy grew by 0.8 per cent in the third quarter of the year, a faster rate than many had been expecting.

The rate of expansion follows on from a surge in growth of 1.2 per cent in the second quarter, and is more than twice the 0.4 per cent predicted by analysts.

However, the data from the Office for National Statistics (ONS) is only an initial calculation, and the figures may yet be revised.

Much of the impetus came from the construction industry, which saw growth of 4 per cent during the three-month period.

Manufacturing slipped from the 1 per cent recorded in the second quarter to 0.6 per cent, a rate that was nevertheless still up on forecasts.

The service sector remained at a 0.6 per cent growth rate.

The Chancellor, George Osborne welcomed the news. He said: “The ONS believe that the underlying growth in the third quarter was broadly similar to the strong second quarter.

“This gives me confidence that although global economic conditions remain choppy, a steady recovery is underway.”

But the Shadow Chancellor, Alan Johnson countered that the economy was still benefiting from the stimulus measures introduced by the Labour government.

The UK economy has now achieved its strongest six-month rate of expansion in a decade and has grown by 2.8 per cent in the past year.

Analysts, though, are counselling caution, pointing out that the force exerted by the upturn in construction may not be sustainable and that GDP growth could well begin to slip in the future.

It is unlikely, on the back of the data, that the Bank of England will contemplate further injections of liquidity into the economy as part of its quantitative easing programme, at least in the immediate short-term.