Member Article

UK avoids recession

UK GDP increased by 0.3% in the first quarter of 2013, lead by growth in the services sector, say the ONS.

ONS chief economist, Joe Grice, said the country’s GDP has broadly taken a “bumpy plateau” with some growth seen since the end of recession.

The increase means the UK has avoided a return to recession, relieving some political pressure from the Chancellor, George Osborne.

A small upward contribution from production was largely attributable to the mining and quarrying sectors which increased by 3.2% following a weak final quarter of 2012.

The construction sector remained weak, contracting by 2.5% in the first quarter, after it had slighty increased in the previous quarter.

ONS evidence suggested that snowfall and cold weather during the first quarter of 2013 had impacted retail output but boosted demand for electricity and gas, increasing output from energy suppliers.

Mr Grice added that it would be difficult to determine the direction of the economy from these statistics, and suggested a longitudinal analysis would yield more insight.

He said: “Whether this is the first upward bump in a sustained period growth, we don’t know.”

Business Secretary, Vince Cable, said the figures were “modestly encouraging” and suggested that the economy was moving in the right direction.

He said: “However there is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports, which I am doing now on my visit to Brazil.

“These issues all need to be addressed before people feel like the economy is genuinely starting to recover.”

Graeme Leach, Chief Economist at the Institute of Directors, said: “The GDP figures are good news just when we needed it. Despite the squeeze on real earnings and the negative impact on confidence from the euro crisis, money supply growth has picked up and with more money sloshing around there has been more growth. We shouldn’t get too excited about 0.3% quarterly growth, but it does provide relief from all the doom and gloom.”

Phil Orford, CEO at the Forum of Private Business, said: “If these figures can help convince both consumers and businesses that the UK has turned a corner, it paves the way for confidence to return and be a springboard for accelerated growth. This is the hope.

“While the service sector looks to have led the way, the construction industry figure is more worrying, and shows the need to get projects moving at a quicker pace.”

This was posted in Bdaily's Members' News section by Tom Keighley .