Recession Ends Amid Olympic Games Boost
The Olympic Games delivered a final medal for Britain today when it was confirmed that strong ticket sales helped the UK exit the longest double-dip recession since the Second World War.
In its first estimate of how the economy performed in the third quarter of 2012, the Office for National Statistics (ONS) confirmed a return to growth of 1% over the three months following a 0.4% contraction in GDP in the previous period.
That was higher than analysts had expected and the strongest quarter of GDP growth for five years meaning the economy has grown 0.3% so far this year but is still 3.1% below its peak in the first quarter of 2008.
In addition to Olympics ticket sales, which contributed 0.2% to the overall performance, there was a rebound from the previous quarter when an extra Bank Holiday to celebrate the Queen's Diamond Jubilee dented economic output.
The Games also helped lift a range of other services including employment agencies, creative arts, office administration, accommodation and food and beverages.
Overall the service sector, which takes in 75% of the UK economy, grew by 1.3% in the period while industrial output grew by 1.1%.
But construction, which accounts for just over 7% of GDP, contracted by 2.5% as low confidence meant new projects remained thin on the ground.
The return to growth is good news for the Government which remains under pressure to do more to stimulate growth amid its austerity drive.
The Treasury released reaction from Chancellor George Osborne via Twitter. He said: "There is still a long way to go but these figures show we're on the right track and are a sign the economy is healing."
"We've cut the deficit by a quarter, over one million jobs have been created in the private sector, inflation is down and the economy is growing.
"Yesterday's weak data from the eurozone were a reminder that we still face many economic challenges at home and abroad.
"By continuing to take tough decisions to deal with debt & equip our economy we are laying the foundations for lasting prosperity."
Shadow Chancellor Ed Balls admitted it was good news that the economy had returned to growth but said it needed an injection of confidence to deliver a sustainable recovery.
He said: "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 - twelve months of damaging flatlining 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.
"The cautious thing to do is to act now to secure and strengthen growth in our economy."
He concluded: "A one-off boost from the Olympics is welcome. But it is no substitute for a plan to secure and sustain the strong recovery that Britain desperately needs if we are to create jobs, get the deficit down and make people better off."
The better than expected growth now makes it less likely that the Bank of England will look to extend further its policy of Quantitative Easing next month, when most economists had predicted further asset purchases to boost money supply further.
The bank has spent £375bn to date on its asset purchase scheme and its Monetary Policy Committee may decide to adopt a 'wait-and-see' approach at its next meeting.
But Citigroup economist Michael Saunders told Sky News it was clear the UK faced "serious headwinds" ahead and the possibility of a 'triple-dip' recession could not be ruled out because of remaining weaknesses and the threat from the Euro area.
what do you think?
Lies, damned lies and statistics.
RECESSION ENDS. Dont think so.
So Mr Osbourne's economic plan is to have an Olympics every quarter and a diamond jubilee, whilst continuing to put people out of work, and deluding himself that the private sector wil put people before profit, the energy companies alone could put most of the country back to work on its profits, save energy? reduce use, = less profit for energy companies, not a chance while the fat cats require obscene bonuses.
ironstine, the last government tried to persuade us all that by employing endless people in the public sector the wealth would be passed on to all. it is known in economics as the multiplier effect and does not work. if you pay a public sector worker 25k it will cost the state over double this figure and what proportion of the 25k gross do you think goes back into the economy, creating proper jobs?
there saying 1 million jobs created, labour was to blame for the world recession, the nhs is safe in our hands, i just asked the murdoch's round for a chat, shop around for cheaper energy deal's is our advice, i'll change european policy xxxxxxxxxxxxxx
All the people who doubt the stats tell us did you believe the stats under the last government or is it because these don't fit with your views that they must be lies!!
Graeme. Got it one sunshine
I don't believe statistics under any government because you make statistics agree with any view you want it's down to what question you get them to ask and what details you get to leave out! As John so rightly puts it Lies, damn lies and statistics!
Cameron is getting desperate, he's shouting up an economy which has had a short summer burst thanks to the olympics when in fact we are plunging further into recession ask all the unemployed and those existing while still working. He's trying to gain popularity with the short sighted anti EU loony toons over the nonsense of prisoner voting rights even though it actually only involves those on short prison terms such as non payment of fines offenders. And now they have just put out propoganda that we pensioners have never been so well off, well thanks for the advance warning of further income hits Cameron. When will you guys ever learn Dave Harrison?
Some people just are not happy unless they can moan about bad news...
most figures are adjusted cough cough, you only have to open your eyes and look ,yes good yr Oympics ,Jubilee, brought a UK spirit out, 40% of my town is unemployed, a good 25% work in London 60 mile away,cost of living prices going through the roof,its very easy when you have no worries to say its getting better,did the last Governemnet do any better no this one no next one no, 2 biggest topics around that people want dealt with is the EU referendum and immigration,mass immigration has not helped this country one bit,so instead of skirting 2 main problems they should deal with it,this is going to be a up and down bumpy ride,to the people who lost there jobs houses explain to them why , to anyone in the Governemnt your plain just a statistical number which has no meaning
I often agree with Lorgar, but on this occasion I will differ. The Diamond Jubilee and the Olympics were two exceptional items and simply marked a short-lived boost to the economy, and even then mainly in areas associated with the Olympics, which means London and a small number of provincial centres. Unfortunately, the Olympics also had a downside, as has happened elsewhere, as the usual tourists stayed away in quite large numbers, which is why there was a 20.12% discount on offer at the peak of the holiday season from many hotels, etc. In any case, statistics like this often turn out to be inaccurate and it takes more than one quarter to give an idea of what really is happening.
what utter rubbish. one burst of income in a quarter does not end a recession lol Europe is in real trouble. bankers and the finance sector are most at blame.
Partly yes, Ali, but a lot of blame must also go to short-sighted governments who borrowed beyond their means to repay when the economic barometer changed to "stormy".
yes short sighted government's we never learn, if mrs t's government had sold the railways and made them profitable, we would all have more confidence in selling the countries assets.
irrespective of party allegiances, we all know that coming out of the "technical definition" of recession means very little to the man on the street. interesting how some say you can't allow one off events to slew the stats but are perfectly happy for these same events to be included when a negative effect is produced!
Tell the folks at the Ford Transit factory that we are out of the recession.
People lose jobs even when the economy is growing, unfortunately.
Ford have always cut costs. So closing a factory is not surprising. They are that tight fisted they dont even put tyre pressure stickers on the transit connect
I promise, if they had published this article 3 years ago, people would have got out of the mindset that we are in a recession and it wouldnt have taken it so long to com out of it! The Media Controls Us. PropaGanda!
Lets hope that we don't end up with a brown triple dipper. Seriously though, any good news is welcome at the moment.
So it was thanks to the Olympics......What are we going to put on next year?
National Tiddlywinks tournament, of course.
Great, I have not noticed my spending power going up, only bills, but not to worry we will go on as before in the real world
Excellent news for the Coalition. We are back on track after the fiasco the Labour Government left us.
Hahahahahahahaha! Yeah right!
The land of the fairy's!!!
The economy was growing at 3.1% before the coalition took over
The recession ended today, like somebody blew a whistle and shouted ''time's up'' ! I don't think so, Argos are downsizing, Ford are considering closing the Transit facility, etc. etc. With little over 1% growth to celebrate following the summer of the Jubilee & Olympics, the onset of winter does not fill me with confidence. Sorry David, I admire your optimism, but then you're not down here with the rest of us.
snow next week
stephen, when you look out your window next week and you see a blizard, switch on your tv and DC or GO will tell you its a bright summer day, now who do you believe, its obviously sun shining.
Sounds like a load of nonsense to me. Eliminate the PSBR and the national debt. Then we'll talk about recovery.
The economy is on shifting sand when a government relies on a one off event (Olypmic Games) to get it out of recession then thing are bad way ask the 1400 Ford workers who have just lost their jobs if the recession is over
i don't believe a word of it.