THE pace of the UK recovery slowed in the third quarter of the year as manufacturing posted its weakest performance since the start of 2013, official figures showed today.

Britain's gross domestic product (GDP) grew as expected by 0.7 per cent, the seventh quarter in a row in which it has increased but lower than the 0.9 per cent in the previous period.

Growth was held back by expansion in the dominant services sector being pegged back sharply and Britain's beleaguered manufacturers seeing a strong performance earlier this year fade away.

The latter sector expanded by just 0.3 per cent, the slowest pace since a 0.1 per cent contraction in the first quarter of 2013, which was before the UK's growth surge that has seen the economy overtake its pre-recession peak.

GDP is now 3.4 per cent ahead of its level at the start of the crisis in 2008 but manufacturing is still 4.1 per cent behind and construction 8.2 per cent short. The latter grew by 0.8 per cent in the third quarter.

The services sector, which represents three-quarters of output, is 7.2 per cent ahead of the pre-crisis level but its growth was believed to have slowed to 0.7 per cent in the quarter, down from 1.1 per cent previously.

Separate monthly data from August showed month-on-month growth in services ground to a halt though an estimate for the following month suggested it returned to expansion in September.

For the overall economy, GDP was 3 per cent higher in the third quarter than at the same period last year, a slowdown compared to the 3.2 per cent comparison for the second quarter.

Chancellor George Osborne said: "Today's strong growth figures show that the UK continues to lead the pack in an increasingly uncertain global economy.

"With all the main sectors of the economy growing, it's clear that our recovery is broadly based.

"But the UK is not immune to weakness in the euro area and instability in global markets, so we face a critical moment for our economy.

"If we want to avoid a return to the chaos and instability of the past, then we need to carry on working through our economic plan that is delivering stability and security."

Britain is expected to be the fastest-growing major economy this year, with the International Monetary Fund (IMF) predicting a GDP increase of 3.2 per cent.

But today's figures showing a slowdown in the pace of the recovery come amid fears for the health of the global economy that have brought turbulence to stock markets in the last couple of weeks.

The stagnating performance of the eurozone, Britain's main trading partner, is a key concern.

The GDP figures come a week after Bank of England chief economist Andy Haldane signalled that gloomier prospects would push back the likely date for an interest rate hike well into next year.

Mr Haldane said the economy was "writhing in both agony and ecstasy".

That is because while growth is strong and inflation is at a five-year low of 1.2 per cent, wage increases have been lagging behind inflation for six years, meaning they have been falling in real terms.

Minutes from the latest meeting of the Bank of England's rate-setting monetary policy committee (MPC) showed a pessimistic view, arguing that gathering problems in Europe increased risks to a sustained upturn.

ING Bank economist Rob Carnell said the 0.7 per cent growth figure was "very respectable".

But he said: "The UK Chancellor may view this as a mixed blessing, after being given a bigger bill for the EU budget thanks to the UK's relative outperformance of its European Union peers.

"This will be especially irksome since despite the stronger growth figures, there has not yet been an accompanying improvement in the UK public finances to match."

Figures earlier this week showed public sector borrowing 10 per cent higher in the first half of the fiscal year than at the same period in 2013/14, against a target for a 12 per cent fall in the annual deficit.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "The UK economy held up pretty well in the third quarter but there are some recent signs that it may be coming a little off the boil, partly reflecting the fact that it is not immune to increased global economic uncertainty and weakness in the Eurozone."

Felicity Burch, senior economist at EEF, the manufacturers' organisation, said: "After strong growth in the first six months of the year, the pace of growth in manufacturing has also slackened as a result of weaker demand from key markets including Europe and China.

"Nonetheless, the domestic economy remains relatively upbeat, and manufacturing sectors with strong exposure to the UK should do particularly well.

"Manufacturing is still on track to grow at its fastest pace since 2010."