Britain's on the path to prosperity! Say the Tories as growth hits its fastest rate since general election By Jason Groves and Hugo Duncan The long squeeze on the incomes of millions of families is coming to an end, George Osborne said yesterday, as growth figures showed the recovery is gathering pace. The Office for National Statistics said Britain's economy grew by 0.8 per cent between July and September, the fastest rate recorded since the election. Ministers seized on the figures as evidence that the Government's austerity plan - which was bitterly opposed by Labour - is now bearing fruit. The Chancellor said the recovery meant better times are in sight for millions of families who have seen their incomes squeezed since the 2008 crash. "Britain's hard work is paying off," he said, adding: "If Britain is growing, then the finances of Britain's families will start to grow." But Mr Osborne also warned that "lots of risks remain," and said there was still a long way to go to eliminate the vast budget deficit left by Labour. David Cameron said the growth figure was "not just a number on a graph," but evidence that a sustained recovery is finally underway. The Prime Minister said he was determined that the benefits of growth would be shared by all parts of the country. "The GDP figures out today do show our economy has real momentum," he said. They show that we are on a path to prosperity. Alex Brummer George Osborne has every right to declare Britain is back on the path to prosperity after the economy recorded robust growth across the board in the three months to September. Remarkably, Britain is now among the fastest expanding of the G7 nations, easily outpacing rivals such as Germany and France. The main driving force behind surging output is the service sector, which comprises 75 per cent of the economy. That has now moved ahead of where it was at the peak of Gordon Brown's boom in 2008. The turnabout in economic fortunes will come as a huge relief to the Government, which has found itself on the back foot for the last week as Britain's Big Six energy firms raised prices. Labour's grudging response to nine months of solid output growth was to acknowledge it as "good news." But Shadow Chancellor Ed Balls could not resist a dig, noting that for millions "standards of living are going down, not up." What Balls forgets to say is that in the UK, unlike most of Europe, austerity has been far less painful because employers have had the confidence to expand the workforce. Some 1.4million private sector jobs have been created since the Coalition came to office in 2010. The faster the economy recovers, the better businesses will do and the easier it will be to restore living standards through honestly earned wage increases - rather than subsidy and welfare dependency. By far the biggest net contributor to the UK's economic renaissance is business services - a sector often dismissed as coffee shops and haircuts. But the reality is that it comprises IT, legal and accounting work, engineering consultancy and architecture as well as some of the leading creative industries. Many of these sell products overseas. The figures also give the lie to the idea of a recovery built on a housing bubble. While both housing and construction are gaining momentum, growing by 2.5 per cent over the past three months, they are still 12.5 per cent below the peak of the Blair-Brown bubble in 2008. There is also some evidence that the economy is starting to rebalance, with manufacturing perking up by 0.9 per cent. The return to expansion is all the more encouraging in that the rest of Europe (the UK's biggest trading partner) is still in slump and the US economy has been subsiding amid serious budget uncertainty. Mr Osborne will, for the first time since becoming Chancellor, have far better growth forecasts to present in his autumn statement on December 4. There may even be a better outcome for the budget deficit as consumer and income tax receipts pick up. We've got a huge amount more to do to secure that recovery. Above all, our work here in Europe and at home is about making sure it is a recovery for all - a recovery for north and south, for rich and poor, for people who have been excluded from our economy. The strengthening recovery is a major blow to the strategy of Shadow Chancellor Ed Balls, who has repeatedly warned the Government's austerity programme would strangle growth. Yesterday Mr Balls gave the ONS figures a cautious welcome, but warned that most families are still not feeling the benefit. Mr Balls said: "For millions of people across the country, still seeing prices rising faster than their wages, this is no recovery at all." Liberal Democrat Business Secretary Vince Cable also struck a cautious note, saying: "We've always said the road to recovery would be a marathon, not a sprint." Economic growth in the third quarter of this year is the fastest since spring 2010, built on 0.7 per cent growth in the second quarter of the year and 0.4 per cent in the first three months. The ONS report showed all the main strands of the economy growing, with output in the dominant services sector up 0.7 per cent, manufacturing 0.9 per cent and construction 2.5 per cent. Analysts said housebuilding was boosted by a surge in mortgage lending on the back of state-supported schemes such as Funding for Lending and Help to Buy. But the economy is still 2.5 per cent smaller than it was in 2008 when boom turned to bust under Labour. Output shrank by 7.2 per cent in the recession and Britain remains trapped in the longest downturn for more than a century. The recent revival in Britain's economic fortunes has fuelled speculation that an early rise in interest rates is on the cards. But, speaking on Thursday night just hours before the GDP figures were published, Bank of England Governor Mark Carney said the economy still lacks enough "traction" to warrant a rate increase. Big rises in energy prices are "morally wrong" David Cameron said yesterday as senior sources said he was preparing to slash the average bill by £50. The Prime Minister took aim at the Big Six energy companies, accusing them of putting up bills by far more than the amount wholesale gas prices have risen. At a press conference in Brussels, Mr Cameron confirmed he wants to remove onerous green levies from the cost of fuel to cut prices for families. But he also admitted the costs were likely to be passed to general taxation. nPower has announced it will increase energy bills by 10.4 per cent from December, while British Gas, Scottish Power and SSE have all announced rises of between 8 and 9 per cent this winter. Asked if such rises were "morally wrong" when wholesale prices have risen by 3 per cent in recent months, Mr Cameron said: "On power bills, I think it is wrong for bills to go up when wholesale prices are not going up substantially." The controversial HS2 rail line "can't go ahead" if Labour withdraws its support, David Cameron admitted yesterday. The Prime Minister, who also faces a major Tory rebellion on the £42billion project next week, said the scheme could collapse unless it retains all-party support. He said: "These multi-year, multi-parliament infrastructure projects, they can't go ahead without all-party support, we won't get the investment, we can't have the consistency." Speculation is mounting that Labour is preparing to drop its backing for the project, which began life under the last Labour government. Shadow chancellor Ed Balls yesterday said it was "irresponsible" of ministers to pledge to press ahead regardless of cost. Labour sources say Ed Miliband has "sub-contracted" the final decision on HS2 to Mr Balls. Mr Cameron warned Labour would damage Britain's long-term prospects if it pulled the plug on the scheme. He said they would be "letting down" the Midlands and the North and would be turning their backs on business.