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UK GDP estimate left at 0.5%

UK GDP grew by 0.5 per cent in the third quarter of the year in line with expectations, according to the latest official estimate.

In its updated assessment of the country’s growth, the Office for National Statistics left its economic growth forecast unrevised from the first estimate published at the start of the month.

The ONS says output in the production industries increased by 0.4 per cent in the three months to September 30. Services output advanced 0.6 per cent although construction’s fell by 0.2 per cent.

Despite the growth forecast meeting analysts’ expectations, the ONS says the data shows “a somewhat mixed picture of the economy” and suggests that underlying growth remains weak.

“The headline growth rate of 0.5 per cent is reasonably solid given the previous three quarters’ growths and the turmoil in markets relating to the sovereign debt crisis in the euro area, which could affect the real economy through reduced confidence, risk aversion and borrowing channels,” the office’s report says.

“However, growth over the last four quarters has been 0.5 per cent and has averaged 0.3 per cent over the last two quarters.”

Earlier this week, the Bank of England’s Inflation Report warned that “the prospects for the UK economy have worsened” and suggested that growth will not exceed 1 per cent in either 2011 or 2012.

The report added that the growth outlook is “unusually uncertain” due to a lack of concrete action on the eurozone debt crisis. The Bank said the problems in the continent are the “single biggest risk” to the UK’s economic health.

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