Britain's economy grew 0.8% in the third quarter, data confirmed today, boosted by net trade outflows, but weakness in household and government spending highlighted risks ahead.
The Office for National Statistics said its second estimate of growth between July and September also confirmed the economy expanded by 2.8% compared with a year ago, in line with analysts' forecasts.
Net trade contributed 0.4 percentage points to growth, the most since the end of 2008, as exports grew faster than imports.
While the figures may reassure policymakers that a period of depreciation of the pound is helping to rebalance the economy, the recovery still faces headwinds from deep government spending cuts that will start to bite from next year.
New figures on expenditure showed household spending growth slowed to 0.3% from 0.7% in the second quarter, while government spending grew by just 0.4%, less than half the pace of the second quarter.
But markets took the data in their stride as it did not alter the view that the Bank of England will keep interest rates at a record low of 0.5% for many months to come to shore up the recovery.
The government plans to slash spending by around £81 billion sterling over the next four years, with the loss of almost half a million public sector jobs. Welfare payments are also set to fall, while a rise in value added tax from January will put further pressure on household finances.
Analysts said they doubted the private sector would be able to make up the shortfall left by public spending cuts, after separate figures today showed business investment fell 0.2% - the first decline in almost a year.
It is also uncertain how well export demand will hold up, given the financial turmoil in parts of Europe, which is Britain's biggest trading partner.
