The UK economy grew in the third quarter, boosted mainly by a strong increase in exports of goods and services.

Britain’s gross domestic product (GDP) rose by 0.8 percent in the third quarter, compared with a rise of 1.2 percent in the previous quarter, UK Statistics Department said on Wednesday.

Markets had expected GDP growth in the UK to remain unrevised at 0.8 percent in June-September period.

“The latest UK GDP figures confirm that the recovery was still going strong in the third quarter – helped somewhat surprisingly by a decent boost from net trade,” said Vicky Redwood, an economist with Capital Economics.

In the third quarter, UK’s trade deficit fell to to £9.7 billion ($15.4 billion) from £10.9 billion ($17.3 billion) in the second quarter, boosted by a 2.2 percent increase in exports of goods and services.

The economy grew at 2.8 percent in the third quarter compared with same quarter a year earlier.

While household expenditure rose 0.3 percent in the third quarter, the government's final consumption expenditure increased by 0.4 percent.

“The breakdown by spending component was broadly encouraging, suggesting that growth was not that reliant on temporary factors,” said Redwood.

However, business investment fell despite a gain of 0.6 percent in overall investment in the third quarter.

“Encouragingly, net trade accounted for half of the expansion in overall GDP. However, there were still some causes for concern,” said Redwood.

Though the retail sales went up by 1 percent in the third quarter, consumer spending rose only 0.3 percent.

“Meanwhile, the business surveys have continued to suggest that GDP growth has slowed sharply in the final quarter of the year. Indeed, we still expect GDP growth of just 1 percent next year,” Redwood said.

UK factory orders rose more than expected in November, but the manufacturers expect the output growth to slow in the next three months, according to a Confederation of British Industry (CBI)’s survey.

UK’s annual inflation stood at 3.2 percent in October, and continued to be above the target of 2 percent for the eighth consecutive month.

Further, inflation is likely to stay above the target for 2011, given the forthcoming rise in VAT to 20 percent from the current 17.5 percent and continuing increases in import prices, the Bank of England said.

However, retail sales in the UK rose by 0.5 percent for the first time in three months during October.