LONDON, England — BRITAIN’S economy grew by 0.8 per cent in the third quarter, twice as fast as expected, according to official figures released yesterday that could calm fears of a double-dip recession.

The growth followed a rate of 1.2 per cent — a nine-year high — in the second quarter, when restocking of inventories and construction surged. The combined expansion was the strongest back-to-back performance by the British economy in a decade, the Office for National Statistics said.

Economic output is now 2.8 per cent higher than in the third quarter of 2009, the last three months of a steep 18-month recession.

Prime Minister David Cameron’s government got more good news as Standard & Poor’s Ratings Services upgraded its outlook for British debt from “negative” to “stable” — indicating no threat of a downgrade — and reaffirmed the AAA rating on long-term debt.

“This is the second major GDP growth surprise in a row and suggests that the UK economy is more resilient than many had feared,” economist James Knightley at ING said of the data release.

“The government will no doubt take this as a sign that the private sector can fill the gap created by public sector cuts, but with consumer confidence, hiring intentions surveys and housing activity data all softening, we

remain cautious.”

The growth will ease pressure on the Bank of England to expand its program of asset purchases, or quantitative easing, to stimulate the economy.

Output of the service industries grew by 0.6 per

cent, a rate matched by manufacturing and other production industries, while construction activity was up 0.4 per cent in the third quarter.

“These numbers will clearly ease near-term concerns over a possible double dip in the UK economy and suggest that GDP growth this year will be a bit stronger than our previous forecast of 1.5 per cent,”

said Jonathan Loynes, chief European economist at Capital Economics.

The government is counting on a surge in private sector activity to replace nearly half a million jobs which will be lost to public sector budget cutting.

Analysts warn, however, that this fiscal tightening, combined with tight credit conditions and slow global growth, will dampen growth significantly in coming quarters.

S&P analyst Trevor Cullinan said he expects Britain’s fiscal deficit, which equalled 11.2 per cent of GDP in 2009, to be cut to three per cent in 2014 — a full percentage point better than his previous forecast.

“We expect that the government will implement most of its expenditure-

led fiscal consolidation programme, which we believe is likely to cause the net general government debt burden to peak at approximately 80 per cent of GDP in 2013 and decline thereafter,” Cullinan said.

Economists suggested that tomorrow’s report made it unlikely that the Bank of England’s Monetary Policy Committee would vote next month to resume its quantitative easing programme, which paused at £200 billion

(US$317 billion).

The bank’s nine-strong Monetary Policy Committee has been split in recent months, with policymaker Andrew Sentance urging a quarter-point hike from the all-time low base rate of 0.5 per cent to tackle persistently high inflation while colleague Adam Posen has been in favour of another £50 billion of stimulus. The remaining seven members have voted for no change in rates or quantitative easing.

Sentance said yesterday that consumer price inflation — currently 3.1 per cent — remained a concern.

“I’m in favour of gradually moving interest rates up from their very low levels, as I think could be done without damaging business and consumer confidence,” he said in an interview with the BBC.

Sentance said that further stimulus would take Britain in the “wrong direction”.

Posen, meanwhile, did not address British monetary policy directly in a speech in Belfast, Northern Ireland, but argued that loose monetary policy does not cause asset price bubbles as contended by some critics.

“No one in East Asia or elsewhere can credibly claim that fear of feading an asset price bubble is justification for keeping an exchange rate undervalued,” he said.