Britain's economy grew more than expected in the third quarter to reach its fastest annual rate in more than three years, official data showed yesterday, suggesting GDP held up well during the credit crunch.
The Office for National Statistics' first estimate showed gross domestic product grew 0.8 per cent in the July to September period, above forecasts for a slowdown to 0.7 per cent from 0.8 per cent in the second quarter.
The annual rate of growth accelerated to 3.3 per cent from 3.1 per cent in the second quarter, well above analysts' expectations for a steady reading, and the strongest rate since the second quarter of 2004.
The pound rose and interest rate futures fell as investors bet the Bank of England will be in no hurry to cut borrowing costs due to the continued strength in the economy.
"The prospect of an interest rate cut this year looks a little less certain than it did," said Philip Shaw, chief economist at Investec.
Pressure had been mounting on the BoE to follow the US Federal Reserve in cutting interest rates to protect the economy from any prolonged slowdown stemming from market turbulence.
The ONS said services sector growth accelerated in the July to September period to 1.0 per cent, driven by the distribution, hotels and restaurants sector - which includes retail - and transport, storage and communications.
That took the annual services growth rate to 4.0 per cent - the fastest pace of growth since the second quarter of 2004.
Retail sales have been surprisingly strong recently despite rising borrowing costs and a global lending squeeze, which raised fears over the outlook for economic growth and triggered the first run on a British bank in more than a century.
However, total production growth slowed sharply to just 0.2 per cent on the quarter from 0.7 per cent, mainly due to much weaker manufacturing output. ( Gulf )