BRITAIN’S economic growth nudged up in the third quarter, but household spending grew at the slowest pace since 2012 as inflationary pressures weighed on consumers.

The Office for National Statistics (ONS) confirmed gross domestic product (GDP) grew by 0.4 per cent in its final reading for July to September this year.

The figure is an improvement on the 0.3 per cent recorded in the first and second quarters.

However, the UK economy is still struggling to bounce back to levels seen in the final quarter of 2016 - when GDP rose by 0.6 per cent.

The ONS said the underlying story is one of a “slowdown in growth”, with annual household spending rising by just one per cent, the lowest rate since 2012.

It comes amid a squeeze on consumer finances from higher inflation, triggered by the Brexit induced collapse in the pound, and dismal wage growth.

Business investment grew at 0.5 per cent and, on an annual basis, GDP expanded by 1.7 per cent in the third quarter, an upward revision from 1.5 per cent.

Darren Morgan, the ONS’ head of national accounts said: “The unrevised third quarter figures show most of the growth came from the dominant service sector, with accounting, recruitment agencies and retailing all performing well.

“Manufacturing also boosted growth thanks to an increase in exports and the introduction of new car models.

“Meanwhile, household spending and business investment both grew steadily."

The figures come just days after the International Monetary Fund (IMF) cut its outlook for UK economic growth and said the Government may be forced to make deeper spending cuts following the impact of Brexit.

In its annual review of the UK economy, the IMF said GDP looked set to expand by 1.6 per cent this year, knocking back its prediction of 1.7 per cent growth from October.

The services sector, which accounts for around 80 per cent of the UK economy and includes banks and restaurants, grew by 0.4 per cent during the third quarter.

The ONS also revealed household disposable incomes grew by 0.2 per cent, which compares to growth of 2.3 per cent in the second quarter.

The household saving ratio also fell, from 5.6 per cent to 5.2 per cent as consumers dipped into their savings.

Separately, the ONS released figures showing Britain's current account deficit coming in at 4.5 per cent of GDP.

The deficit stood at £22.8bn, compared with economists' forecasts of £21.4bn and down from £25.8bn in the second quarter.