Booming house prices in the south-east could help Tory election prospects, along with an improved economic outlook

Economy grows by 0.8%

Economy grows by 0.8%

The UK economy grew by 0.8% in the third quarter of 2013, according to officials GDP figures released today.

The news, which was broadly in line with expectations, is a shot in the arm for Downing Street, which is relying on an improved economic outlook to be able to improve on its 2010 general election vote when it goes to the polls in two years' time.

But ministers will be under pressure to keep their public utterances subdued, as ministers recognise that the recovery has yet to be felt among the public at large.

"This shows Britain's hard work is paying off and the country is on a path to prosperity," George Osborne tweeted.

The economy is now just 2.5% below its pre-recession peak, with nearly two-thirds of the fall in output recovered.

The service economy grew by 0.7%, construction by 2.5 and manufacturing by 0.9%.

Production grew by just 0.5%, partly due to a fall in output in the gas and electricity industry.

The service sector has now recovered the fall in output since the financial crash and stands 0.4% higher than its pre-recession level.

Manufacturing remains 8.9% below its pre-recession peak and construction 12.5% below.

Osborne will be privately jubilant that three years of stagnation have ended but he will be publicly downbeat in his assessment of the nation's finances ahead of the autumn statement in December.

The chancellor is expected to warn the public that several more years of spending restraint will be needed before the structural deficit can be curbed.

Deputy prime minister Nick Clegg said the figures showed Britain was "firmly on the road to economic recovery".

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.

"Working people are on average over £1,500 a year worse off since David Cameron came to office, yet very high earners have enjoyed a huge tax cut. And on the cost of living, growth and the deficit, this government have failed every test they set themselves in 2010."