UK economy in cautious recovery heading into 2014

London (AFP) - Britain is cementing its economic growth recovery, official data revealed on Friday, as the government's deficit-reduction programme won support from the Standard and Poor's ratings agency.

But analysts voiced doubts surrounding the duration of the recovery as separate figures revealed a widening of the country's public deficit, adding to market concerns over Europe-wide growth.

The Office for National Statistics said British gross domestic product (GDP) grew by 0.8 percent in the third quarter, confirming previous estimates, while the data came at the end of a week in which Britain announced a larger-than-expected drop to unemployment.

Also on Friday, the ONS said the government's public sector net borrowing requirement, excluding taxpayers' money used to rescue banks, rose to £16.5 billion ($27 billion, 19.7 billion euros) in November compared with £15.6 billion a year earlier.

Ahead of the data, Standard and Poor's confirmed its top 'AAA' credit rating for Britain, noting the government's commitment to reducing its budget deficit even if the deep austerity measures continue to slash public sector jobs.

Offsetting these losses has been a pick-up in jobs created by the private sector.

"Markedly rising employment and a robust housing market will likely underpin consumer spending over the coming months," Howard Archer, chief European & UK economist at consultants IHS Global Insight, said on Friday.

Archer also noted however that "if the recovery is to be sustained at a healthy pace, it really does need a marked, extended pick up in business investment and for exports to improve markedly".

Gross domestic product grew by an upwardly-revised 1.9 percent in the third quarter or three months up to the end of September, compared with output a year earlier, the ONS added on Friday. The prior estimate had stood at 1.5 percent.

At 0.8 percent, the quarteron-quarter rate marked the fastest pace for more than three years.

The government welcomed the figures.

"Today?s data show that the recovery has been stronger than previously thought and that the government?s long term economic plan is working," a Treasury spokesperson said.

"But risks remain and the job is not done, so the government will go on taking the difficult decisions needed to deliver a responsible recovery for all."

S and P holds top rating

Standard and Poor's on Friday confirmed its top 'AAA' credit rating for Britain, noting the government's commitment to reducing its budget deficit.

It comes as S&P downgraded the European Union's long-term credit rating one notch, from "AAA" to "AA+", citing weaker credit worthiness among the bloc. Britain is part of the EU but not the single currency eurozone bloc.

The ratings agency said it expected average annual British GDP growth of more than 2.0 percent during 2013-2016.

"During 2013, the UK's economic recovery has been supported almost exclusively by private consumption, alongside residential investment, as net lending to individuals has gradually recuperated from very low 2009-2012 averages," S&P said.

The ratings agency though added that its outlook on the long-term rating of Britain remains negative.

"The negative outlook reflects our view of at least a one-in-three possibility that we could downgrade the UK in the next year if our growth projections fail to materialise. Lower-than-expected (British) growth could derail recent indications of an improvement in fiscal performance and reignite challenges to financial stability," it warned.

Downgrades by ratings agencies can cause a country to pay higher interest for its debt.

Official data earlier this week revealed that British unemployment had reached a four-year low of 7.4 percent.

The Bank of England, under governor Mark Carney, has stated that it will not raise borrowing costs from a record-low 0.50 percent at least until the unemployment rate falls to seven percent, under a "forward guidance" policy.