(Reuters) - British households increased the pace of their spending in the three months to September but businesses investment grew more slowly, suggesting caution among companies ahead of Brexit, official data showed.
Britain's overall economic growth sped up moderately in the third quarter to 0.4 percent from the second quarter, the Office for National Statistics said on Thursday, confirming a preliminary gross domestic product (GDP) reading.
But the breakdown of the figures showed the economy remained reliant on spending by households who are suffering a squeeze on their incomes from rising inflation and slow wage growth.
Britain's budget watchdog on Wednesday cut its economic growth forecasts for every year into the early part of the next decade as it chopped its projections for productivity growth.
Thursday's data showed household spending grew at a quarterly rate of 0.6 percent, up from 0.2 percent in the second quarter, to show the fastest increase in a year, despite the income squeeze.
Business sentiment weak
The ONS said spending on transport rose, helped by a recovery in car sales which had been weak in the second quarter after a tax increase.
But businesses upped their investment by only 0.2 percent in the three months to September, the weakest pace so far in 2017.
Both sterling and the UK equity markets were weaker on Thursday, with the pound slipping 0.1% against the dollar to $1.3308 and down 0.32% to €1.1235 against the euro. The FTSE 100 was down 0.31% to 7,396 in mid-morning trade.