UK avoids recession with 0.3% growth

25 Apr 13
The UK economy grew by 0.3% in the first three months of 2013, saving it from a triple-dip recession

By Richard Johnstone | 25 April 2013

The UK economy grew by 0.3% in the first three months of 2013, saving it from a triple-dip recession.

Construction site

Figures published by the Office for National Statistics today show most of the growth came from the service sector, whose output rose by 0.6%. The production sector also improved, with 0.2% growth, largely due to increases in mining and quarrying. But output from the construction sector fell by 2.5%.

The increase in gross domestic product means the economy has avoided two consecutive quarters of contraction, which would have put it into recession for the third time since the 2008 financial crisis.

However, GDP over the past 18 months has been ‘broadly flat’, the ONS added, with the economy just 0.4% larger in the first quarter of 2013 than it was in the third quarter of 2011.

It is also 2.6% below its pre-crisis peak.

Commentators said the fact that 0.3% growth was seen as good news showed how far the economy had sunk. They were also concerned that the growth was unbalanced.

Andrew Goodwin, senior economic adviser to the Ernst & Young Item Club, said: 'It shows how low we now set the bar that growth of 0.3% comes as a welcome surprise.'

The variation between sectors was also a matter of concern. 'Once again we’re seeing the service sector having to do all of the heavy lifting and, within that, consumers and the government continue to play a major role. What we’re seeing is unbalanced growth, but beggars can’t be choosers and unbalanced growth is better than no growth at all.'

Overall, he was 'optimistic that this will mark the beginning of a more sustained recovery after several false starts over the past 18 months'.

Trades Union Congress general secretary Frances O’Grady commented: 'The chancellor has set the economic bar so low that avoiding the UK’s first ever triple-dip recession is considered good news.

'The economy is flat-lining, unemployment is growing and the much-needed rebalancing of the economy, away from financial services and the Southeast, has failed to materialise.'

She added that the construction sector was almost 10% smaller than when the chancellor took office.

However, the CBI business group said that the figures indicated a ‘welcome uptick’ in economic activity.

Director general John Cridland said the growth confirmed the CBI’s view that 2013 ‘will see real growth’.

He added: ‘The broad-based pick-up in the services sector is an encouraging basis for further organic growth.

‘What Britain’s economy now needs to see in the coming months is a recovery in manufacturing output, helped by a brighter global outlook. The government must build on these emerging signs of confidence by getting behind Britain’s entrepreneurs and exporters.’

Today’s ONS report added that the snowfall and cold weather in the first three months of 2013 appeared to have had a limited impact on growth.

It also said that today’s estimate could be revised as more information on the economic output across the economy becomes available.


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