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26.10.12

Cautious welcome for economy growth

The UK has emerged from its double-dip recession with higher than expected growth in the third quarter of 2012.

The 1% rise in GDP over the quarter represents the strongest growth since 2007, the ONS said, although much of the increase is due to the Olympics and the unwinding of one-off factors like the extra bank holiday for the Diamond Jubilee.

The ONS’s early estimate suggests output from the construction industry declined by 2.5%, but hotels and restaurants expanded by 1.6%, transport by 0.8% and business services and finance were up 1%.

Nearly 0.7% of the growth is estimated to be attributed to the Olympics, including ticket sales.

Chancellor George Osborne gave the results a cautious welcome, but Labour stated that the growth was still far below what the Government originally predicted.

Osborne said: “There is still a long way to go, but these figures show we are on the right track. This is another sign that the economy is healing and we have the right approach. By continuing to take the tough decisions needed to deal with our debts and equip our economy for the global race we're in, this government is laying the foundations for lasting prosperity.”

Ed Balls, the shadow chancellor, said: “This is no time for complacency and wishful thinking.

“Today’s figures show that underlying growth remains weak and that our economy is only just back to the same size as a year ago – 12 months of damaging flat-lining which has seen borrowing rise in the first half of this year.

“And with living standards falling, more tax rises on the way, small business lending down and the eurozone still in crisis, it would be very unwise of David Cameron and George Osborne to just sit back, cross their fingers and hope for the best.

“Osborne said two years ago the economy would grow by 4.5% over these two years, and it’s grown by 0.6%. It’s been a fifth of the growth of America or Germany. He said he'd get the deficit down; our borrowing in the first six months of this year is up. And families are really seeing their living standards down, and we've got really high long-term youth unemployment. That is not a working plan.”

And business secretary Vince Cable said: “This is not recovery in the traditional sense since this is not a recession in the normal sense. It remains a very deep crisis and we are very cautious.”

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