UK economy grows 0.7% in third quarter despite high oil prices

The UK economy grew by 0.7 percent in the third quarter despite high oil and gas prices. The Office for National Statistics (ONS) said the growth matched City analysts' expectations and showed consumers and businesses remained resilient under pressure.

The ONS said a jump in petrol, diesel and natural gas prices following the renewed escalation of the conflict in the Middle East played an important role in restricting growth in the three months to the end of September.

In a boost for Chancellor John Healey, the ONS also said the economy grew by 0.2 percent month on month in September. It revised August's growth rate down, however, from 0.1 percent to zero.

Economists had expected zero month-on-month growth in September and growth of 0.7 percent over the three months to the end of September.

Oil prices have fallen in recent days, but in September they rose above 100 dollars a barrel and stayed above that level until earlier this month. Natural gas prices were also about three times the level seen in February, before the United States and Israel attacked Iran.

The Office for Budget Responsibility said at the time of the November budget that it expected the economy to expand by 1.2 percent this year. With growth continuing to exceed expectations, that forecast already looks out of date.

Policymakers at the Bank of England voted last week to raise interest rates by a quarter of a percentage point to 4 percent, in order to cool inflationary pressures in the economy.

Inflation has risen this year mostly in response to higher motor fuel prices, which have pushed petrol in the UK above 1.70 pounds a litre and diesel towards an average of about 2 pounds a litre.