GDP figures show UK avoids triple-dip recession

Posted on 25 Apr 2013

The UK economy grew by 0.3% in the first quarter of the year, avoiding entering its third recession in five years, according to the Office for National Statistics.

The growth is mainly due to a strong performance of the service industry and a boost in oil and gas output in the North Sea.

The service sector, which represents around three quarters of the UK economy, grew by 0.6% in the first three months of the year.

Chancellor George Osborne said: “Today’s figures are an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress. The deficit is down by a third, businesses have created over a million and a quarter new jobs, and interest rates are at record lows. By continuing to confront problems head on, Britain is recovering and we are building an economy fit for the future,” he added.”

GDP rose by 0.6% compared with the first quarter of 2012, the largest year-on-year increase since 2011. However, the economy as a whole is still well below pre-crisis levels

Last week the International Monetary Fund urged the UK to rethink its austerity measures, but the government said these are necessary to ensure growth in the future.

John Cridland, CBI director-general, said: “This is a welcome uptick which confirms our view that 2013 will see real growth. 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.”

Manufacturers’ organisation EEF also commented on the GDP figures announced today. Terry Scuoler, chief executive of EEF, said: “This is modestly good news. However, the economic challenges we face are shared by much of the rest of the world, particularly Europe, and are hampering manufacturing’s efforts to export our way to growth.

“The message to government remains the same. It must ensure it delivers on its commitments to increase investment in our infrastructure and increase competition in the banking sector. It must also build on the expansion of Funding for Lending to get credit flowing to companies, especially SMEs.”