We may be in an age of austerity but the economy has offered more than just a whimper that the UK will ride the tide of cuts and mass employment.

The economy grew by 0.8% in the last three months, discrediting fears that Britain’s economic recovery is floundering. One CIPD figure, however, warned for a need for a plan B when the CSR cuts begin to bite.

Data released today showed that economic growth slowed between July and September, following growth of 1.2% recorded in the previous quarter. Although growth was slower it was still twice as strong as the City had supposed, with most analysts expecting growth of just 0.4%.

Dr John Philpott, Chief Economic Adviser at the Chartered Institute of Personnel and Development (CIPD) said of the preliminary Q3 2010 GDP growth estimate:

“News that the UK economy grew by an estimated 0.8% in the third quarter of the year is greatly encouraging but is likely to make it even harder for the Bank of England’s Monetary Policy Committee (MPC) to decide on whether further quantitative easing (QE) is needed to offset any negative effect from the coalition government’s tax and spending squeeze.

“The estimated buoyancy in the economy helps explain why private sector job creation continued into the late summer and early autumn. But with construction the main driver of growth in the third quarter, and ‘government and other services’ still a significant driver, there must be a question mark over what will happen when government cutbacks really start to bite in the coming months.

“This latest good news on growth may well be enough to cause the MPC to postpone further QE for the time being. But with QE itself a far from certain remedy for supporting economic growth, argument surrounding the coalition government’s need for a Plan B fiscal policy if things take a turn for the worse next year will not go away.”

Much of the growth was due to the construction industry, which grew by 4% during the quarter. The services and industrial sectors both expanded by 0.6%, the Office for National Statistics said.

Chancellor George Osborne said the the better-than-expected data showed that a “steady recovery” is in motion.

“Along with the decisive action we are taking on the deficit it should help underpin confidence,” Osborne said.

But shadow chancellor Alan Johnson argued that the UK economy was still feeling the benefit of the stimulus measures taken by the last government.