The surge is the biggest in almost three years,
boosted by a rise in construction output and a rebound in activity after
But economists said the figures gave the Bank of
England no impetus to change interest rates, which have remained static
at 4% for the past 13 months.
The 0.9% growth was a marked improvement on the 0.6%
rise seen in the previous three-month period, from April to June and was
an increase of 2.1% on the same period last year.
But the ONS said the figures were affected by the
Jubilee celebrations in June which depressed activity in manufacturing,
retail, business and financial services because of bank holidays.
"Without the effect of the Jubilee, the data
would not have shown an acceleration but a deceleration in growth,"
said the ONS.
Growth in household spending also grew more slowly,
showing a rise of 0.8% in the three months to September compared with
growth of 1.2% in the previous period.
The slower spending figures were compounded by a fall
in business investment, which dropped 9.8% when compared with the same
period last year.
However, savings figures were likely to cheer
economists who have been warning about the UK's rising debt levels.
The saving ratio rose from 5% to 5.6% in the period.
Simon Rubinsohn, an economist at Gerrard, said this "seemed to
demonstrate a rather greater prudence than some of the borrowing figures
ITALY MEETS 2003 BUDGET DEADLINE
Italy's conservative government has passed the 2003
budget, which includes a controversial package of tax amnesties,
billions of euros of tax cuts and privatisations.
The budget aims to lower Italy's high deficit, but
has been criticized for letting off tax cheats and making
over-optimistic economic forecasts.
The upper house of parliament had already approved
the bill after an all-night session in which one deputy threw his mobile
phone at another.
The budget includes 7.5bn euros (£5bn; $7.5bn) in
corporate and personal income tax cuts, which the government hopes will
boost economic growth.
To offset the lower revenues, the budget includes 8bn
euros in spending cuts, a tax amnesty expected to raise about 8bn euros
through fines, and privatisations to bring in 4bn euros.
The lower house of parliament voted 298 to 110 in
favour of the 2003 budget bill, after more than three months of
The EU's head of monetary affairs, Pedro Solbes, has
criticised the budget for depending too heavily on one-off measures and
has warned that forecasts for next year are "imprudent".
In October, the International Monetary Fund said the
tax amnesties would undermine the government's power to collect taxes in
Under the amnesty, tax cheats and those with overdue
television licence fees, car registrations and rubbish removal taxes,
can settle accounts by paying a one-off fine.
The budget also forecasts a deficit of 1.5% of gross
domestic product, but economists question whether that can be achieved.
WAR RISK UNSETTLES EUROPEAN INVESTORS
European investors lost heart in December as the risk
of war in Iraq added to fears about the state of the global economy, a
new survey suggests.
The UBS index of investor optimism, prepared by Swiss
bank UBS and Gallup, sank to its lowest level since the monthly report
began in October 2001.
The survey questioned investors in France, Germany,
Italy, Spain and the UK, and 58% said they were pessimistic about
economic growth over the next 12 months.
Worse still, 45% of those questioned said they
thought it was either very, or somewhat, likely that Europe would get
stuck in a prolonged stagnation similar to Japan's.
EURO ZONE "AT RISK OF RECESSION"
The eurozone economy is stagnating, and may fall into
recession in the new year, according to a press report.
Economists at leading investment banks believe growth
in the euro area slowed to a standstill during the final three months of
2002, and will contract early next year, the Business newspaper
Weak consumer spending, sluggish industrial
production, and faltering business confidence are to blame.
"The euro area is experiencing a mini-recession
this cold winter, with no growth at all in the last quarter of 2002 and
a dip into negative territory in the first quarter of 2003," Morgan
Stanley economist Eric Chaney told the Business.
"We cannot even exclude an outright recession,
two or three consecutive quarters of negative GDP growth."
GLOBAL TENSION 'IS HURTING GROWTH'
The United States economy is showing tentative signs
of recovery, the central banker of the world's largest economy has said.
Any significant fall in global political tensions
would boost investment and spur growth, said
US Federal Reserve chairman Alan Greenspan in a
speech to the Economic Club of New York.
In recent months, fears of a Middle East war have led
to volatile stock markets and oil prices. Mr Greenspan did not
specifically mention Iraq, which is being investigated by United Nations
inspectors checking for illicit weapons of mass destruction.
The US central bank has cut interest rates 12 times
since the start of 2001 to bolster consumer spending and keep down
borrowing costs for industry.
VENEZUELA BEGINS IMPORTING OIL
Venezuela has begun importing oil as an
opposition-led strike to force the resignation of President Hugo Chavez
leads to further oil and food shortages.
The announcement from the world's fifth largest oil
exporter came as striking executives of Venezuela's state oil firm,
PDVSA, voted to continue the strike which began on 2 December.
Several opposition rallies were taking place as
mediators scheduled more talks to end the crisis.
Thousands of protesters demonstrated in the streets
of Caracas and at the PDVSA headquarters.
CHINA CRACKS DOWN ON CYBER CAFES
China has closed more than 3,000 internet cafes, in
what the government says is part of a national workplace safety
The official Chinese news agency said the closures
were a safety measure prompted by the deaths in June of 25 people in a
fire at an internet cafe in Beijing.
TURKISH LEADER'S PM HOPES REVIVED
The Turkish parliament has passed amendments to the
country's constitution that would allow the leader of the governing
party, Recep Tayyip Erdogan, to sit in parliament.
The amendments have already been vetoed once by the
Turkish President, Ahmet Necdet Sezer.
Mr Erdogan was barred from parliament because of a
conviction for inciting religious hatred.
FAKE GOODS FLOOD RUSSIA
The Russian Interior Ministry has announced that up
to 90% of all goods sold on the Russian consumer market are fake.
This includes goods as varied as household
appliances, cosmetics, food, clothing and medicines.
The news will be of serious concern to international
companies, but it is unlikely to surprise most Russians.
ZIMBABWE RUNS SHORT OF BANKNOTES
After years shortages of fuel and basic commodities,
Zimbabwean's now face a lack of banknotes, the state-run Herald
newspaper has reported. The paper said queues outside banks and cash
machines were now as common-place as at petrol stations and
UK house prices rose by just 0.1% in December, the
lowest rise in more than a year, according to figures.
Property web site Hometrack suggested the slowdown
had been driven by falling prices in London and the south east of
England, but said the price boom was continuing elsewhere in the
CHRISTMAS SALES 'UNSPECTACULAR'
British retail sales edged higher in the run-up to
Christmas, but did not grow as fast as some shopkeepers had hoped,
according to a press report.
Preliminary figures compiled by the British Retail
Consortium and accountancy firm KPMG show that sales for the first two
weeks of December were 3-4% up on the same period last year, the Sunday
NIGERIA AVOIDS DIRTY MONEY SANCTIONS
The world's leading rich and industrialised countries
have decided not to impose sanctions against Nigeria after it passed new
money laundering laws.
The Nigerian legislation "significantly enhances
the scope of Nigeria's 1995 anti money laundering law," the
Organisation for Economic Cooperation and Development (OECD) said.
But it warned that "deficiencies" remained
and called for "special attention" to be given to financial
transactions in Nigeria.
MICROSOFT ORDERED TO CARRY JAVA
A US judge has ordered software giant Microsoft to
include Sun Microsystem's Java programming language in its widely-used
Windows operating system. The order is to remain in force pending the
final outcome of a lawsuit brought by Sun Microsystems against
VIVENDI RAISES 3BN EUROS TO CUT DEBT
The Heavily indebted French-American media giant
Vivendi Universal has raised a further 3bn euros (£1.9bn; $3.1bn) by
selling off parts of the business.
BRAZIL AND CANADA SET TO END JET ROW
A six-year fight between Brazil and Canada over state
subsidies to each country's aviation industry looks set to be settled
after a World Trade Organisation ruling in Brazil's favour.
The ruling allows Brazil to impose $248m (£156m) in
"retaliatory sanctions" on Canada for illegal subsidies to
three small airlines to get them to buy planes from Quebec-based
GOLD SURGE AIDS SOUTH AFRICAN MINERS
South Africa's gold producers are benefiting from
soaring prices for the precious metal. Fears that the US could strike
Iraq as early as January are driving up the price of gold to levels not
seen for six years.
JAPAN GETS NEW FINANCIAL DIPLOMAT
Less than a month after US President George W Bush
ditched his top economic team, Japan is following suit in the hope of
warding off the rise of the yen.
The leadership of the finance ministry's
international division — the job usually termed "Japan's
financial diplomat" — is passing to Zembei Mizoguchi from
Haruhiko Kuroda. Initially there is expected to be little shift in
CHINA WEB PORTALS ON THE RISE
Shares in three China-directed web portals are
climbing high on the US NASDAQ market, thanks to forecasts that all
three could soon turn a profit.
NetEase.com, Sina.com and Sohu.com all ended Monday
up more than 7% to levels not seen since late 2000.
Admittedly, none are anywhere near the heights scaled
by dot.com stocks before the bubble burst early that same year.
SINGAPORE INFLATION CREEPS UPWARD
Prices have risen in Singapore for the first time in
five months, in a welcome sign that the island state could avert the
threat of deflation.
According to the Department of Statistics, increases
in the cost of food, clothing and housing meant the main consumer price
index rose 0.2% in November, the first upwards move since June.
US HOLIDAY SPENDING STALLS
US consumers and businesses have kept a close watch
on their cash in the run up to Christmas, with three separate reports
showing flat or falling sales.
Orders for durable goods - costly items intended to
last three years or more - fell unexpectedly in November the commerce
JAPAN REVEALS BUDGET PLANS
Japan's finance ministry has unveiled a draft budget
which increases spending for the first time in two years.
However, the finance minister said belt-tightening
cuts to public works spending would take place and that spending was
"under control". The budget envisages record government
borrowing on the international bond market.