ONS figures show that the UK isn't in nearly as bad shape as once thought
After much speculation and suggestion, we finally have confirmation that the UK has avoided the dreaded triple-dip recession.
The preliminary estimates from the Office of National Statistics (ONS) show that GDP increased by 0.3% in the first quarter (Q1) of 2013, with the services sector taking most of the plaudits for this small yet significant growth.
A 0.6% GDP rise in the services industry - contributing 0.47 percentage points to the overall 0.3% increase in GDP - follows a flat Q4 2012 figure, which was affected by increased output in Q3 2012 due to the Olympic and Paralympic games. In the latest quarter there was widespread growth, with increases in most service sector industries.
Meanwhile, there was an upwards contribution from the production sector, which grew by 0.2%, largely due to mining & quarrying, which increased by 3.2% following a weak Q4 2012 when extended maintenance in the North Sea reduced output. These increases were partially offset by a downwards contribution from the construction sector, which fell by 2.5%.
The ONS says that at this stage the snowfall and cold weather during Q1 2013 appears to have had a limited impact on GDP growth. The strongest evidence was that it reduced retail output in January and March 2013 but boosted demand for electricity and gas in February and March, which increased output in the energy supply industries.
George Osborne claimed that the figures “are an encouraging sign the economy is healing”, adding that “there are no easy answers to problems built up over many years.”
Business secretary Vince Cable also chipped in. “We've always said the road to recovery would be a marathon, not a sprint,” he said. “There is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports. These issues all need to be addressed before people feel like the economy is genuinely starting to recover.”
So whilst it's good news, we're not quite out of the woods yet. As marathons go, this one threatens to drag on for a few extra miles, and then some…