UK GDP Rises 0.8%, But Mark Carney Warns Recovery Lacks 'Traction'

The UK economy has grown by 0.8% GDP in the third quarter of 2013, although Mark Carney warned that the recovery has yet to gain "traction".

The latest figures from the Office for National Statistics show that GDP enjoyed its best increase for three years, but the economy is still 2.5% below its pre-recession peak, while the US is currently 4.6% above its pre-recession levels.

The news of continued economic growth will be a political boost for chancellor George Osborne in the short to medium term, as Labour has been forced to focus on living standards rather than earlier concerns about double or triple dip recessions.

Speaking on Thursday night, Carney said the Bank of England was not going to withdraw monetary support in its "quantitative easing" as the recovery has failed to gain "traction.

He said: "The recovery has begun, it is strengthening. But we are not going to withdraw monetary stimulus until it has gained that traction."

The economy has grown by just 2.6% since November 2010, whereas it was originally forecast to grow 7.7% by the Office for Budget Responsibility. Just over a third (0.3%) of the growth came from the "business services and finance" sectors.

The economy grew 0.7% and 0.4% in the previous economic quarters of 2013. In response to the figures, George Osborne said on Twitter: "This shows that Britain's hard work is paying off & the country is on the path to prosperity."

Despite the growth figures, the employment outlook is still sobering, after the ONS told the Huffington Post UK that at least half a million more people would need to get jobs before the employment rate returns to its pre-recession peak.

Labour shadow chancellor Ed Balls said: “After three damaging years of flatlining, it's both welcome and long overdue that our economy is growing again. But for millions of people across the country still seeing prices rising faster than their wages this is no recovery at all.

A Treasury spokesman said: "Many risks remain, but thanks to our economic plan the recovery now has real momentum.

"All parts of the economy are growing, the deficit is falling and jobs are being created and that's the only sustainable way to raise living standards for hardworking families."