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GDP growth revised down to 0.7% in Q3

The UK economy grew by 0.7% in Q3 compared with the previous quarter, revised down from the 0.8% rise published in November, Office for National Statistics data shows.

Gross Domestic Product in volume terms fell by 4.9% during 2009, revised up from the 5% fall previously published.

The household saving ratio was 5.0% in the latest quarter, compared with 3.5% the previous quarter.

Real household disposable income rose by 1.1% in Q3 after a 2% drop in Q2.

The output of the production industries increased by 0.5% in Q3, revised down from 0.6% published last month.

Construction output is estimated to have risen by 3.9% in Q3 after a 7% increase in the previous quarter revised down from the 9.5% originally published.

The business services and finance sector exhibited flat growth in the latest quarter, compared with a 0.9% rise in Q2.

Vicky Redwood, senior UK economist at Capital Economics, says the detail contains both encouraging and worrying aspects.

She says: “On the positive side, the breakdown of domestic demand now looks more favourable, with a weaker contribution from government spending offset by a much stronger one from investment.

“And a strong rise in household income meant that the household saving rate rose from 3.5% to a healthier 5%.

“But on the downside, stockbuilding made a bigger contribution than previously thought, while the net trade boost in Q3 has been revised away.”

Capital Economics expects the UK economy to grow by 1.5% next year.

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