UK economy finally returns to growth

UK returns to growth

The UK has emerged from its longest double-dip recession since the 1950s, official figures confirmed today.

In its preliminary report for the third quarter, the Office for National Statistics (ONS) said that GDP increased by an estimated 1.0% compared with the second quarter following nine months in recession.

GDP was flat compared to the third quarter of last year.

Chancellor George Osborne said that there is still a long way to go, but the figures show that the government is “on the right track”.

Shadow chancellor Ed Balls also welcomed the news but added that underlying growth remains weak. Chuka Umunna, shadow business secretary, commented that with the construction industry still struggling, small business lending falling and the squeeze continuing, there is no room for complacency.

Ticket sales for the Olympics and Paralympics are estimated to have increased GDP in the third quarter by about 0.2 percentage points. In addition, the extra bank holiday in June for the Queen’s Diamond Jubilee meant that there was one less working day in the second quarter, impacting on the quarter-to-quarter comparison.

Overall, the biggest contribution to the growth in GDP came from the services sector, which grew 1.3% from the prior quarter. Output of the production industries was up by an estimated 1.1%, while construction sector output decreased by some 2.5%. Compared to a year ago, construction output decreased by 10.8%.

The Civil Engineering Contractors Association (CECA), which represents contractors of all sizes in the UK, said that negative growth in the construction sector is acting as a drag on the wider economy.

“Given the importance of the industry to the UK economy, delivering projects that support growth in other sectors, as well as employment for millions of UK workers, it is vital that steps are taken to rebuild UK construction,” commented CECA director of external affairs Alasdair Reisner.

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