Chancellor George Osborne received a boost today as official figures showed that the UK economy grew by 0.8% during the third quarter of 2013, the fastest pace in three years.

It was the third successive period of improving output and the best performance since the second quarter of 2010, the Office for National Statistics said.

The figures, which were in line with expectations, saw all sectors of the economy grow, including a 2.5% surge in construction, a sector bolstered by Government initiatives such as Help to Buy.

Overall GDP was 1.5% ahead of the same period last year, a strong comparison with a time when the economy was boosted by the Olympics and Paralympics.

The year-to-year rise is higher than the 1.3% improvement at the end of this year’s second quarter.

But the economy remains 2.5% off its pre-recession peak at the start of 2008.

During the third quarter, construction was boosted by new work on private housing and private commercial building as well as domestic home repair and maintenance.

Housebuilders have been buoyed by the Government’s Help to Buy scheme, which recently launched a new phase offering mortgage guarantees. However, construction remains 12.5% off its pre-crisis peak.

Production grew by 0.5%, though this remains 12.8% off its 2008 level, while within this manufacturing improved 0.9% in the third quarter. It is 8.9% off the level five years ago.

Meanwhile, the powerhouse services sector, which represents three-quarters of economic output, grew by 0.7% and is now 0.6% above its pre-crisis peak.

The largest contributions here came from business services and finance, followed by distribution, hotels and restaurants.

Chancellor George Osborne said on Twitter: “This shows that Britain’s hard work is paying off & the country is on the path to prosperity.”

And Prime Minister David Cameron tweeted: “Today’s encouraging #GDP growth figures are another sign we are turning a corner.”

But Shadow Chancellor Ed Balls said: “After three damaging years of flatlining, it’s both welcome and long overdue that our economy is growing again.

“But for millions of people across the country still seeing prices rising faster than their wages this is no recovery at all.”

The 0.8% growth figure builds on an improvement of 0.7% in the second quarter and 0.4% in the first quarter.

Samuel Tombs of Capital Economics said the figures confirmed the UK was enjoying “a period of healthy and well-balanced growth”.

He said it was likely that the UK recorded the fastest quarterly growth rate within the G7 countries in the third quarter.

But he added that a squeeze on real incomes as wage growth lagged behind inflation, together with the fiscal squeeze and a stagnant eurozone were likely to prevent recovery gathering much more pace.

It echoed remarks by Bank of England governor Mark Carney last night, when he said the rate of growth was “towards the top end of the advanced economies” but “coming from a very very low base”.

Chris Williamson, chief economist at Markit, said: “Britain is booming again with the economy showing the most sustainable and robust-looking upturn since the financial crisis.”

But Alan Clarke of Scotiabank said the figure was a “tad disappointing” - given survey data indicating growth nearer 1% - and “wasn’t a home run”.

Jeremy Cook, chief economist at foreign exchange company World First, warned that the squeeze on real incomes meant growth continuing at such a pace would be unsustainable, predicting that today’s figure would be the “high-water mark” for now.

Howard Archer of IHS Global Insight predicted that growth would slip back to 0.6% for the fourth quarter amid the squeeze on purchasing power.

John Allan, national chairman of the Federation of Small Businesses, said confidence was rising across UK regions but warned that the wage squeeze coupled with energy price rises would mean households having less to spend.

He urged more help from the Chancellor to help firms invest and grow.

Lee Hopley, chief economist at the manufacturers’ organisation EEF said: “With three consecutive quarters of growth and a clean sweep of positive numbers across all the major economic sectors, this is the strongest run of data for three years.

“Manufacturing also now seems to have some get up and go with the recent expansion the fastest since 2010 Q3, and is bang in line with all the survey evidence we have seen in recent months. This is particularly encouraging following the on-off recovery over the past few years and suggests that the monthly contraction in industrial output in August was fully reversed in September.”

A Treasury spokesman said: “All parts of the economy are growing, the deficit is falling and jobs are being created - and that’s the only sustainable way to raise living standards for hardworking families.”

But Dave Prentis, general secretary of the Unison union, said: “The fact that the GDP has grown by 0.8% between July and September will mean nothing to the vast majority of people in this country faced with mounting household bills and stagnant wages.”