Gross domestic product increased 3.3 percent in the three months through September from a year earlier, the Office for National Statistics said in London today. The reading was higher than the 3.2 percent previously estimated by the government, which was the median forecast of 26 economists in a Bloomberg News survey. On the quarter, the economy expanded 0.7 percent.
Economic growth may have peaked after a worldwide credit market slump swelled losses at banks and provoked a slowdown in the housing market. Bank of England policy makers made their first unanimous decision for a rate cut in six years this month, saying that financial market turmoil posed a greater threat to the economy than faster inflation.
Consumer spending expanded 1.1 percent in the quarter from the previous three months, the most since the second quarter of 2006 and higher than the 1 percent previously estimated, the statistics office said. Fixed investment in the quarter was revised up to 2.4 percent from 1.6 percent measured last month.
Bank of England policy makers made their first unanimous decision for a rate cut since 2001 this month, lowering the rate to 5.5 percent. Prime Minister Gordon Brown said yesterday that Britain is prepared to withstand turmoil in financial markets because of decisions he made to keep a lid on inflation.
Services expanded 0.8 percent in the quarter, down from a previous estimate of 0.9 percent the statistics office said. Manufacturing growth stalled, as measured last month.
While a pool of pent-up demand will support property values next year, the credit squeeze will keep prices from rising, the Royal Institution of Chartered Surveyors said in a report today, the latest showing that the decade-long housing boom that supported consumer spending is coming to an end.
Inflation concerns prevented policy makers from cutting the rate by more than a quarter-point this month, minutes of the Dec. 6 meeting published yesterday show. Consumers' price expectations jumped to the highest in at least eight years in November as food and energy prices soared, a central bank survey showed Dec. 13. Crude oil reached a record $99.29 on Nov. 21.
The implied deflator fell to an annual 2.9 percent in the third quarter from 3.9 in the previous three months, the statistics office said today.
The current-account deficit widened to 20 billion pounds in the third quarter, the most since records began in 1948, the statistics office said today in a separate report.