UK Economy Expands More Than Forecast In Q3

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'While GDP growth in Q3 was a slight uptick on the previous quarter, the UK's combined economic growth performance over the first nine months of 2017 was still the weakest since late 2012, and indicates that the United Kingdom economy remains locked onto a low growth trajectory.

Britain's economy picked up speed ever so slightly in the third quarter, official data showed on Wednesday, strengthening expectations for an interest rate hike next month.

To be clear, any rate rise will be small.

He added: "Today's numbers seem to have increased the likelihood of an interest rate rise next week, with sterling gaining nearly half a cent against the dollar".

Construction has contracted for the second quarter in a row, although the industry still remains well above its pre-downturn peak.

Chancellor Philip Hammond said that they show a "successful and resilient economy which is supporting a record number of people in employment". "Despite the weak outlook, the Bank of England will now nearly certainly raise the Bank Rate by 25 basis points on 2nd November", said Daniel Vernazza, chief United Kingdom economist at UniCredit.

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One rate rise, or more?

"The Bank argues that inflationary pressures could rise sharply if not checked by higher interest rates, and that the current low unemployment rate could lead to much faster wage growth".

The production-side breakdown of GDP showed that services remained the largest contributor to GDP growth, with the 0.4 percent quarterly expansion. It is possible that if inflation proves stubborn, unemployment continues to remain low, wages start to increase more rapidly and growth strengthens, then rates may rise a little quicker than markets now expect.

The growth came despite financial and economic worries over Brexit and a future trade deal with the EU.

The jump in growth over the last quarter appears to have largely been attributed to the UK's service sector, with robust growth in Britain's most significant wealth generating sector helping to offset a decline in other areas.

Manufacturing expanded by 1% during the quarter - a return to growth after a weak second quarter.