UK GDP Growth Fastest In Nearly 2 Years

The UK economy expanded at the fastest pace in nearly two years in the third quarter driven by household spending and exports, despite heightened uncertainty over the Brexit deal.

Gross domestic product advanced 0.6 percent sequentially after expanding 0.4 percent a quarter ago, figures from the Office for National Statistics showed Friday.

The growth rate was the fastest since late 2016 and matched economists' expectations.

However, monthly estimates showed that real GDP stagnated in September and August. GDP growth in the third quarter was driven by the 0.3 percent expansion in July, which stemmed from strong retail sales and the World Cup.

In the third quarter, growth in services output slowed to 0.4 percent, but remained the largest positive contributor to GDP growth, the ONS said.

Construction output growth picked up to 2.1 percent following a weak start to the year, while quarterly output in the manufacturing sector rose for the first time in 2018, which was up 0.6 percent.

Due primarily to the increase in manufacturing, total production grew 0.8 percent in the third quarter.

Household spending grew 0.5 percent, while business investment fell 1.2 percent from the preceding three months. Net trade contributed 0.8 percentage points to GDP growth, with a 2.7 percent rise in exports and flat growth in imports, data revealed.

On a yearly basis, GDP grew 1.5 percent in the third quarter, in line with expectations.

"The sun shone on the UK economy over the summer, boosting economic growth relative to the second quarter," Alpesh Paleja, CBI principal economist, said. "But as the impact from the warm weather and World Cup fades, we expect subdued growth ahead."

In the latest economic forecast, the European Commission said the impact of a no-deal Brexit is expected to be much larger on the UK than on the EU 27.

UK growth is expected to remain weak at 1.2 percent in 2019, marginally lower than the estimated 1.3 percent in 2018, the commission added.

The Bank of England has forecast the economy to expand 1.3 percent this year and 1.7 percent in 2019. The central bank cautioned that the outlook will depend significantly on the nature of EU withdrawal.