British household spending growth picked up to its fastest pace in nearly a year in the third quarter even though overall growth was sluggish to offer hope that the worst of a consumer slowdown may be over.
The Office for National Statistics said today the economy grew 0.4 per cent in the July-September period, unrevised as expected, while the annual growth rate nudged up to 1.7 per cent from 1.6 per cent.
That hands a slight boost to Finance Minister Gordon Brown ahead of his pre-budget report on December 5th, but growth this year is still set to record its weakest pace in 12 years at around half the pace he predicted before the May election.
Household expenditure grew by 0.5 per cent, the fastest pace since the final quarter of last year, supporting the Bank of England's view that consumers spending growth is recovering gradually after a sharp slowdown in 2005.
The Bank of England (BoE) has signalled that borrowing costs will probably remain on hold at 4.5 per cent for several months.
The BoE expects growth to pick up sharply next year, banking on a consumer upturn, higher exports and more business investment.