UK GDP: Consumer spending keeps recovery ‘on the road’ as business investment picks up

UK GDP: Consumer spending keeps recovery ‘on the road’ as business investment picks up

“The recovery has so far failed to broaden out beyond the consumer,” he said. “A large contribution to growth came from stock building, which is unlikely to be sustained in the coming quarters. If this rapid accumulation of inventories had not occurred, the UK would have contracted in Q3 by 0.1pc.”

A survey by the Centre for Economics and Business Research (CEBR) showed consumer confidence in November increased at the slowest pace in nine months.

The YouGov/CEBR Consumer Confidence Index rose to 110.1 in November, from 109.4 in October, but confidence is still more than five points below the pre-crisis peak.

“Two months into the final quarter of the year it seems like an air of caution is hanging around – almost like the ghost of the financial crisis,” said Charles Davis, associate director at the CEBR.

“While consumer spending has helped the recovery in 2013, there is a limit to how much the battle-hardened consumer can drive the economy forward.”

Britain’s unbalanced recovery was also highlighted yesterday by a 2.4pc quarterly fall in exports, meaning that Britain’s deficit widened to £8.9bn in the third quarter, knocking 0.9 percentage points off GDP growth.

Mark Carney, the Governor of the Bank of England, tried to calm concerns this week that Britain’s recovery was overly dependent on domestic demand, telling MPs that it was part of the “lifecycle” of recoveries that business investment followed a pick-up in household spending.

Britain’s growth rate of 0.8pc in the third quarter means it is expanding faster than America, Japan, Germany, France and Italy on a quarter-on-quarter basis.

Meanwhile, High street sales were flat for a second consecutive month in November, according to the Confederation of Business Industry (CBI). Its distributive trades survey found 35pc of firms said sales were up on a year ago in November compared with 34pc which reported a fall. The resulting balance of 1pc was much lower than the 10pc expected by economists.

Supermarkets and clothing retailers were the worst-hit, while the furniture and DIY categories performed strongly, driven by Britain’s strengthening housing market.

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