BRITAIN is on the "path to prosperity", George Osborne has declared, after the economy grew in the third quarter at its fastest pace for three years.

The 0.8% upturn in gross domestic product for July through to September was the best performance since the second quarter of 2010.

It included a 2.5% surge in the construction sector, which has been bolstered by Coalition initiatives such as the Help to Buy scheme south of the Border.

Figures from the Office for National Statistics also showed that it was the first time in three years that growth had improved for three successive quarters.

Yet, the size of the economy is still 2.5% off the pre-recession peak of early 2008 and there were warnings that the pace of growth could start to tail off.

Nonetheless, there was delight in Whitehall. The Chancellor said: "This shows Britain's hard work is paying off and the country is on the path to prosperity."

Prime Minister David Cameron, at the EU summit in Brussels, added: "Today's encouraging GDP growth figures are another sign we are turning a corner."

However, their Liberal Democrat colleague Vince Cable, the Business Secretary, gave a more cautious response, stressing more needed to be done to address the lack of bank lending. "We've always said the road to recovery would be a marathon, not a sprint," he said.

Shadow Chancellor Ed Balls welcomed the figures but noted: "For millions of people across the country still seeing prices rising faster than their wages, this is no recovery at all."

If growth continues at this pace, by next summer it will pass beyond where the economy was when the 2008 crash happened. Coming months before the 2015 General Election, it could pose a big political problem for Labour.