UK business investment suffers 'unexpected' drop in Q3

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Business investment fell by 0.7% in the third quarter despite a steadily growing economy, Office for National Statistics data has revealed.

The drop, which means business investment was estimated to stand at £44.6bn in the third quarter, bucks a recent trend of consistent growth. Despite the decline, the total amount remains 6.3% higher than in the same quarter last year.

It comes as the ONS confirmed its previous estimate of a 0.7% increase in UK GDP for the third quarter. On an annual basis, GDP grew by 3%.

All the four main industrial groups experienced growth, although growth in production was revised down from the previous estimate.

Seneca Partners director Richard Manley said:"GDP came in as expected but it is disappointing to see that business investment fell during the third quarter.

"The drop in business investment is slightly unexpected given that overall business confidence has picked up considerably over the past year. This dip underlines that there is still a problem in the business community and that problem is the perennial one of access to finance."

Elsewhere, however, the economy benefited in Q3 from a jump in consumption - total domestic expenditure increased by 1.2% in the quarter, buoyed by the thirteenth consecutive positive quarter-on-quarter increase for household final consumption expenditure.

The surge was accompanied by an increase in wage growth, with compensation for employees climbing by 1.2% in the third quarter.

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