GDP rises by 0.7% in third quarter

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Media caption,

Chancellor George Osborne: "Britain is leading the pack in an increasingly uncertain global economy"

UK economic growth slowed in the three months to September, with the economy expanding by 0.7%, the Office for National Statistics said.

The figure was weaker than the 0.9% expansion recorded for the second quarter.

Economists had correctly predicted that the economy would expand by 0.7% in the July-to-September period.

Gross domestic product (GDP) was 3% higher in the three months than the same period in 2013.

The third quarter figure will raise concerns that the recovery will fall victim to the slowdown affecting the eurozone.

However, the UK still looked set to be the fastest-growing advanced economy this year.

Chancellor George Osborne said that growth in manufacturing and construction as well as services was very encouraging. "The UK is leading the pack in an increasingly uncertain global economy," he added.

Shadow Chancellor Ed Balls said that the GDP figures revealed a concerning slowdown in economic growth. "Most people are still not feeling the recovery," he said.

Media caption,

Ed Balls: "Britain's export performance... has been doing worse than our European comparative countries"

Analysis: Jonty Bloom, business correspondent, BBC News

Growth of 0.7% is still good; it works out at 3% a year and that is better than most of our competitors including France and Germany.

There are also signs of some rebalancing, as construction and manufacturing grew along with the huge services sector. But the rate of growth has slowed and the fear is this may be the start of a trend.

With wages low, a surge in high street spending is unlikely. With the eurozone in the doldrums again and Chinese growth slowing, an export boom is not on the cards either.

That may be why Mr Osborne warned earlier this month that the UK economy is at a "critical" juncture.

Output in the dominant services sector rose by 0.7%, down from 1.1% growth in the second quarter.

It was up by 0.5% in production, 0.8% in construction and 0.3% in agriculture.

World First chief economist Jeremy Cook said the 0.7% figure was respectable.

But he added: "Headwinds from the current slowing of output in Europe and China are obvious dangers to the UK's growth picture, and with real wages staying determinedly negative at the moment, there are concerns about how much farther domestic demand levels can be pushed."

Sterling rose 0.15% to $1.6056 after the figure was announced, while the euro edged lower to 78.82 pence.