UK economy weaker than expected - as it happened

Analysts believe growth figures of 0.4% mean no interest rate rise until well into 2016

2.38pm GMT

Taking its lead from markets elsewhere, Wall Street has opened sharply higher as commodity prices - oil in particular - gained ground.

The Dow Jones Industrial Average is up 133 points or 0.7% in early trading, while the S&P 500 is up 0.37% and Nasdaq is 0.49% better.

2.20pm GMT

Back with the UK GDP figures, and here is economics correspondent Phillip Inman's analysis of what the data means for the chancellor:

George Osborne's year has ended with a bump. Like a Strictly Come Dancing finalist drunk on high marks for his paso doble and tango, he has come unstuck on the last foxtrot.

Official growth figures have been downgraded for the third quarter, undermining boasts that the UK was marching hand in hand with the US as one of the best-performing economies in the western world.

A series of revisions by the Office for Budget Responsibility had upgraded the UK's growth forecasts while maintaining the steady path of deficit reduction. With the economy expanding at a rate our European neighbours could only dream of, and the annual deficit predicted to reach zero by the end of the parliament, Osborne's chances of becoming the next prime minister seemed on track.

Now that the Office for National Statistics has told us that growth in the third quarter was lower than previously forecast, the rate for the whole year is likely to be around 2.2%, compared to 2.9% in 2014.

Related: George Osborne's economic year ends with a bump

1.43pm GMT

Business investment in the US slowed last month as orders for capital goods (excluding defence and aircraft) fell 0.4%, more than double the decline expected.

This compares to a rise of 0.6% in October, itself down from an initial reading of a 1.3% increase.

1.23pm GMT

Greece has received a1bn from the EU bailout fund, the European Stability Mechanism after completing a second set of reform milestones.

The money will be used for debt service, budget financing and co-financing projects funded by EU structural funds. The ESM has also handed over a5.4bn for bank recapitalistation. In a statement the ESM said:

ESM Managing Director Klaus Regling said: "With the disbursement of a1 billion, the ESM is supporting the Greek government in its reform process. The reforms cover a wide array of policy fields that are important to modernise the Greek economy. Notable examples include measures to stimulate competition in the energy sector, which should bring down prices, as well as a new law to help banks manage their exposure to non-performing assets, which will free liquidity and boost economic activity.

Mr Regling added: "I hope the good cooperation with our Greek partners will continue, so that the first review of the ESM programme can be completed in early 2016. Only a successful conclusion of this review can lead to discussions on further debt relief for Greece, as the Eurogroup has said before."

1.20pm GMT

Despite the weak GDP figures, a rate rise from the Bank of England is still expected next year, even if not in the immediate future. Calum Bennie, savings expert at Scottish Friendly said:

Growth may be fragile but it is continuing and so attention will turn to an interest rate rise at some point in 2016. This is yet another sign that the party could be over for cheap borrowing. The guests may still be in the room but the music has stopped and with interest rate rises on the horizon borrowers have to prepare now for the very real possibility of larger debt repayments in 2016. People need to turn their attention to putting money aside to reduce any risks to their financial future as there is a degree of uncertainty ahead.

12.28pm GMT

Here's our take on the UK GDP figures by economics editor Larry Elliott:

The chances of the government hitting its growth forecast for 2015 has receded after official figures showed the economy performing less well than originally thought in the first three-quarters of the year.

In a second pre-Christmas setback for George Osborne, the Office for National Statistics on Wednesday cut its estimates for expansion in both the second and third quarters.

Related: More pain for George Osborne as ONS cuts UK economic growth

11.46am GMT

UK productivity, measured by output per hour, grew by 0.5% from the second to third quarter. The ONS said this was the highest level recorded for the series, but since it only began in 2008, it is 13% below a trend extrapolated before the financial downturn in that year.

11.23am GMT

Better news for the UK government, with the current account deficit stable at 17.5bn in the third quarter compared to expectations of a figure of 21.5bn.

That accounts for 3.7% of GDP and is down from the peak figure of 28.5bn in the fourth quarter of last year. IHS Global Insight economist Howard Archer said:

The UK current account deficit was unexpectedly stable in the third quarter at the lowest level since the third quarter of 2013 as a reduced shortfall in investment income countered a renewed widening in the total trade deficit.

It is of some relief that the UK current account deficit was stable at a reduced level in the third quarter. While the markets have so far taken a relatively relaxed view of the UK's elevated current account deficit, it could become an increasing problem if the markets lose confidence in the UK economy for any reason.

11.16am GMT

The GDP figures show the problem of the UK economy relying on domestic demand, says economist Nina Skero at the Centre for Economics and Business Research:

Today's release only adds fuel to the existing concerns that economic growth is overly reliant on household consumption. Given continued subdued performance in key markets and the relative strength of sterling (which may get even stronger as interest rates begin to rise), boosting trade prospects will require constant government encouragement. Programmes such as Exporting is Great, which offer advice and access to export opportunities for firms, are a step in the right direction. We still expect relatively robust GDP growth of 2.0% in 2016, but much of this relies on the boost to consumption arising from low inflation and higher wages. While this is fine in the short term, it is not sustainable formula for economic growth in the long run.

11.10am GMT

More from the UK GDP report.

First, the dominance of the service sector:

10.59am GMT

Back with the UK GDP figures and David Kern, British Chambers of Commerce chief economist said:

It is not hugely surprising to see GDP growth downgraded slightly, as it is in line with the revisions in our own forecast earlier this month. However it is concerning that it weaker growth in our dominant services sector has played a part.

Given the slump in our manufacturing sector, our services sector will still be expected to drive economic growth as we enter 2016.

10.42am GMT

On the oil price, Opec assumes it will average $55 a barrel during 2015 (at the moment Brent crude is $36.48) and will reach $70 (in 2014 prices) by 2020 and $95 by 2040:

[This reflects] a gradual improvement in market conditions as growing demand and slower than previously expected non-Opec supply growth eliminate the existing oversupply and lead to a more balanced market. This, in turn, will provide support to prices.

10.35am GMT

Opec also predicts that $10trn of investment is needed by 2040 to cover future needs:

The increase in the overall requirement for OPEC crude between 2015 and 2040 is almost 10 mb/d, while for non-OPEC liquids it is just over 3 mb/d.

It all means that investments remain huge. Oil-related investment requirements are estimated to be around $10 trillion between now and 2040. In the current market environment what this underlines is the delicate balance between prices, the cost of the marginal barrel and future supplies.

10.26am GMT

Demand for Opec's crude oil will be lower in 2020 than next year, with supply from rivals proving stronger than expected, according to the oil producing organistation's latest outlook report.

The prediction raises questions about how successful Opec's strategy of not cutting production to keep crude prices low has been at hurting other producers. Reuters reports:

Opec... which a year ago refused to cut supply to retain market share against higher-cost rivals, in its 2015 World Oil Outlook raised its global supply forecasts for tight oil, which includes shale, despite a collapse in prices.

Demand for Opec crude will reach 30.70 million barrels per day (bpd) in 2020, OPEC said, lower than 30.90 million bpd next year. The expected demand from OPEC in 2020 is about 1 million bpd less than it is currently producing.

Oil has more than halved its price in 18 months [which] has helped to boost oil's medium-term use, although OPEC said the demand stimulus of low crude prices will fade over time.

"The impact of the recent oil price decline on demand is most visible in the short term," Opec Secretary-General Abdullah al-Badri wrote in the foreword to the report. "It then drops away over the medium term."

10.11am GMT

The UK's economy is now expected to grow by 2.2% in 2015, rather than 2.4%, according to IHS Global Insight economist Howard Archer. In the wake of the disappointing third quarter GDP figures and the lower numbers for the previous quarter, he said:

GDP growth was disappointingly revised down to 0.4% quarter-on-quarter and 2.1% year-on-year from the previously reported 0.5% quarter-on-quarter and 2.3% year-on-year. In addition, second quarter GDP growth was revised down to 0.5% quarter-on-quarter from 0.7% quarter-on-quarter.

Growth was held back in the third quarter by net trade which knocked 1.0 percentage points off growth. This fuels concern that UK growth is far too reliant on domestic demand, even allowing for the fact that the third quarter trade performance was partly a payback for a strong second quarter.

10.00am GMT

The UK Treasury is of course putting a brave face on the disappointing GDP figures, reminding everyone that the IMF praised the UK economy but warning that risks remain:

Read our spokesperson quote in response to today's @ONS quarterly national accounts release #GDP pic.twitter.com/lYHtAbYueg

9.56am GMT

However, GDP growth per head is now back above the level seen during the financial crisis in 2008:

Nearly 8 years later, UK GDP per head is finally back above pre-crisis levels. pic.twitter.com/dpijCNN2l1

9.47am GMT

The weaker than expected UK GDP figures come a day after disappointing borrowing data of course:

Related: Latest borrowing figures threaten Osborne's deficit target

9.44am GMT

UK GDP growth of 2.1% in Q3 was the lowest in 2 years, below every forecast from 30 economists polled by Reuters. pic.twitter.com/KLs2Vw4fN0

9.40am GMT

Here is a chart from the ONS showing the breakdown of GDP, and the changes between this reading and the last:

9.36am GMT

Weaker growth in the service sector was behind the lower growth figure, according to the Office for National Statistics.

As well as third quarter growth being revised downwards, annual growth was also cut from the previous reading of 2.3% to 2.1%.

9.31am GMT

Breaking news:

The UK economy grew less strongly than previously thought in the third quarter, up 0.4% compared to initial estimates of 0.5%.

9.10am GMT

Here's our report on Game Digital from Sean Farrell:

Game Digital shares plunged after the retailer warned that profit would fall sharply after sales of games since the start of the Christmas holidays were worse than expected.

The seller of video games and consoles said UK sales for the 21 weeks to 19 December fell 11.4% to 353.4m as gamers failed to buy enough games for new consoles to make up for a steep fall in demand for older formats.

Related: Game shares fall 40% after profit warning

8.40am GMT

More on the French economy:

Sharp drop in #French consumer goods spending in Nov. suggests total household spending will be a drag on GDP in Q4. pic.twitter.com/u3SeOgIXix

8.28am GMT

Mining shares are among the gainers in London, points out Tony Cross, market analyst at Trustnet Direct. He said:

London's FTSE-100 has surged higher at the open with thin volumes ahead of the Christmas break arguably exaggerating the move. Hopes that Chinese stimulus measures could buoy the fortunes of natural resources stocks, combined with some elements of a short squeeze, have driven miners to the top of the board. These gains may well look a little more sustainable after iron ore prices rose in Australian trade.

8.11am GMT

European stock markets, as forecast, have made some strong opening gains.

The FTSE 100 is up 68 points or 1.1% in early trading, while Germany's Dax has added 1.2%, France's Cac and Spain's Ibex have both climbed 1%, and Italy's FTSE MIB is 0.8% higher.

8.06am GMT

Company tax affairs are in the spotlight at the moment.

Amazon and eBay are facing action over VAT, as Simon Bowers reports:

Top tax officials are exploring whether Amazon and eBay can be forced to foot the bill for ballooning VAT fraud associated with an army of small overseas sellers who are rapidly coming to dominate sales of many popular items on Britain's leading shopping websites.

Related: Amazon and eBay face crackdown over VAT fraud by overseas sellers

Related: Anger at City banks paying little or no corporation tax

8.03am GMT

The French economy grew by 0.3% in the third quarter, confirming earlier readings after showing no growth in the previous three months.

Meanwhile French consumer spending fell unexpectedly by 1.1% in November, compared to expectations of a 0.1% increase.

French consumer spending on goods disappointingly fell back 1.1% m/m in Nov in blow for Q4 growth hopes. We currently expect 0.2% q/q growth

7.52am GMT

And an early Christmas profit warning. Computer games retailer Game Digital said it had seen challenging trading conditions and disappointing sales since the start of the festive school holidays.

So it expected half year profits to come in at 30m. Analysts at Liberum said:

UK sales have fallen off sharply in the past few weeks at the most critical time of year for Game. General weakness has been exacerbated by very rapidly slowing sales in old format content, down 57% in the UK, and while sales of new generation content remained strong these were not enough to offset the decline. The Spanish market remains strong with sales up 8%.

While a decline in old format sales was expected the scale has surprised the company while the importance of Christmas trading has hugely magnified the issue. We cut our full year earnings per share forecasts by 60%, 2017 estimates by 42% and 2018 by 30%. There is no updated guidance on the dividend, but we note that current year cover is just 0.5 times.

7.47am GMT

Meanwhile oil prices have edged higher, with Brent crude up 1% to $36.48 a barrel.

But on Tuesday, for the first time in 10 years, Brent had traded below the level of US West Texas Intermediate.

Brent and WTI move back to parity. $CL_F $BRENT pic.twitter.com/tGHnhbA2mf

7.44am GMT

European markets are expected to open higher after a fairly mixed day on Tuesday:

Our European opening calls: $FTSE 6130 up 47 $DAX 10574 up 85 $CAC 4605 up 37 $IBEX 9486 up 71 $MIB 21190 up 129

7.41am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.

The UK economy is expected to have grown more slowly in the third quarter, as we get the final snapshot of the latest GDP figures, and then to improve again in the final three months. But the data will not be strong enough to prompt the Bank of England to consider an interest rate rise until well until 2016.

We expect GDP growth in the third quarter to be confirmed at 0.5% quarter-on-quarter and 2.3% year-on-year. We expect GDP growth to improve to 0.6% quarter-on-quarter in the fourth quarter, resulting in overall GDP growth of 2.4% in 2015. The 1.7%month-on-month jump in retail sales volumes in November suggests that consumer spending will be strong in the fourth quarter, which increases the possibility that growth could surprise on the upside and come in at 0.7% quarter-on-quarter.

[UK GDP growth] to some extent has been slightly disappointing in the readings seen thus far in that it has only shown growth of 0.5%. There is an outside expectation that we could see an upward revision to 0.6% as a result of a strong September due to the Rugby World Cup and a buoyant services sector, which in turn should offer some optimism that the fourth quarter will be similarly positive.

As far as rate rise expectations are concerned, it probably won't move the dial that much in that a UK rate rise still seems some way off into 2016, after further policymaker comments in the last few days regarding the benign inflation outlook, and which has served to push the pound to eight month lows against the US dollar, a rather strange state of affairs for one of the best performing economies in the G7 this year.