UK economy tops growth estimates

Stronger UK growth will provide the Chancellor a little seasonal cheer

Britain's economy expanded faster in the third quarter than previously estimated, official figures show.

GDP rose by 0.8% on the quarter between July and September and was up 2.1% on the same period last year, the Office for National Statistics (ONS) reported.

The ONS had previously estimated that the economy grew by 0.7% on the quarter and 2.0% on the year.

The upward revision was largely due to higher estimates for health and social work and business activities.

Rates to rise?

Greater activity in the insurance services and wholesaling sectors also helped to boost GDP, the ONS said.

The third quarter figure - which analysts had expected to remain unchanged - was the fastest quarterly growth since the third quarter of 2002, which also came in at 0.8%.

The figures will lend further support to the Bank of England's decision last month to raise interest rates for the first time in nearly four years.

Many analysts now expect a further increase in the cost of borrowing early in the new year.

UK deficit widens

However, while the upwardly revised GDP figures may have provided some Christmas cheer for the Chancellor, the news was not all good.

Separate figures from the ONS show that Britain's current account deficit ballooned to £8.1bn in the third quarter, up from a revised £7.8bn in the previous three months

It was the highest deficit since the final quarter of 2000 and was driven by larger deficit in trade in goods.

Britain's balance of payments deficit with the European Union was £5.9bn, while with non-EU countries it stood at £2.2bn, the ONS said.