The economy expanded by 0.7 per cent in the third quarter of 2010, and by 1.1 per cent in the second. Yet the ONS revised both levels down by 0.1 per cent on their November estimates.
The declines “are nothing to be too concerned about,” according to Andrew Goodwin, economist at the Ernst and Young Item Club. “Growth at that level is certainly not to be sniffed at -- six months ago we would have happily taken that,” he added.
And investment for the three months to September grew by 3.4 per cent on the previous quarter, a huge rise from the previous estimate of 0.6 per cent – driven largely by business investment, which totalled £30.2bn.
“We expect to see a steady recovery in investment in the quarters ahead,” said Hetal Mehta of Daiwa Capital Markets.
And personal savings were healthier than expected. On average households saved five per cent of their disposable income, up from November’s estimate of 3.5 per cent, while households’ disposable incomes grew by 1.1 per cent.
“The higher level of saving is comforting,” said Philip Shaw of Investec. “It gives households a bigger buffer of unspent disposable income to withstand next year’s spending cuts and any further increases in costs such as food prices.”
“The UK recovery is still strong and confirms our assessment that the economy will be able to cope with the deficit cutting programme without a major relapse,” said David Kern of the British Chambers of Commerce.
However, there was also an increase in less sustainable elements of growth, such as stockbuilding. Growth in stockbuilding for the three months to September tripled, to 0.3 per cent.
And the contribution of government expenditure fell by 0.4 per cent in the third quarter, a downward revision from the previous estimate, which showed a 0.6 per cent rise.
Although on Tuesday the ONS released figures for November showing an surge in government spending, sending the deficit back to worrying levels for chancellor George Osborne.
Yet economists at least remain confident of private sector performance.
“Manufacturing is still growing at a strong pace,” said Chris Williamson of Markit. “It is likely to lead the economy going into 2011, taking advantage of rising demand in key export markets such as the US, Germany, France, China and the Middle East.”