UK economy returns to growth with help from Olympics

 
Graph: GDP growth, quarter on previous quarter since 2008

The UK economy emerged from recession in the three months from July to September, helped by the Olympic Games.

The economy grew by 1.0%, according to official gross domestic product figures (GDP), which measure the value of everything produced in the country.

The Office for National Statistics said that Olympic ticket sales had added 0.2 percentage points to the figures.

The figures are welcome news for business and ministers, said the BBC's economics editor Stephanie Flanders.

"The positive 'surprise' in these figures is largely to be found in the service sector, which is estimated to have grown by 1.3% in the third quarter, after shrinking by 0.1% in the three months before," she said.

The data also exceeded expectations from economists, who had predicted an increase of 0.6% in the quarter.

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It is growth - even with all the one-offs - and faster growth than most in the City expected”

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'Right track'

The economy had been in recession for the previous nine months and has still not recovered the levels of output seen before the financial crisis in 2008.

The ONS said that beyond the effect of ticket sales, it was hard to put an exact figure on the Olympic effect, although it cited increased hotel and restaurant activity in London as well as strength from employment agencies.

The GDP figures were also enhanced by comparison with the previous three months, because the second quarter had an extra public holiday as part of the Diamond Jubilee celebrations in June, as well as unusually bad weather, which reduced growth.

"There is still a long way to go, but these figures show we are on the right track," said Chancellor of the Exchequer George Osborne.

"Yesterday's weak data from the eurozone were a reminder that we still face many economic challenges at home and abroad."

Shadow chancellor Ed Balls praised the news but said that the figures "show that underlying growth remains weak".

"A one-off boost from the Olympics is welcome," he said. "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."

David Cameron: "We're on the right track"

The data is a preliminary estimate from the ONS, meaning that the third-quarter figures could be revised higher or lower.

"While the news is positive, the estimate must be put in context," said David Kern, chief economist at the British Chambers of Commerce.

"The 1% GDP figure for the third quarter is affected by distortions in the second quarter due to the Jubilee and Olympic ticket sales. Compared to a year earlier, the figures show that the economy is stagnant."

The ONS said that the economy had contracted by 6.4% between the start of 2008 and the middle of 2009, and had since recovered about half of that lost output.

The level of output in the third quarter of 2012 was almost exactly the same as it had been in the third quarter of 2011.

 

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  • Comment number 105.

    All this user's posts have been removed.Why?

  • rate this
    +4

    Comment number 104.

    I recall Osborne howling with laughter and derision when Labour posted meagre growth such as this up until they exited office. Growth is growth is growth. Either it's a good thing or not. If it wasn't in 2010, why is it now? Let's see what the next quarter brings.

  • rate this
    +3

    Comment number 103.

    As I said the Olympics maybe benefited London, but not the rest of the UK in any form worth measuring. Pulling the Olympic wooly jumper (pun intended) over our eyes will not work DC. We are up the creek without the proverbial paddle. And a change of government will not help us. Don't trust any of you now.

  • rate this
    +1

    Comment number 102.

    Last couple of years with Labour were atrociuous with UK GDP down around 6% in 2008 and yet when we have a 1% GROWTH in this quarter the great Ed Balls says growth is weak - what a muppet.

  • rate this
    0

    Comment number 101.

    "Olympic ticket sales had added 0.2 percentage points to the figures."


    If only we'd changed much much more for the tickets just think how much better we'd be say the economy was doing.

    Is it real and is it a one-off?

  • rate this
    +2

    Comment number 100.

    Utter rubbish. Recent announcements, 1500 jobs to go at Ford, 380 jobs at Kimberley Clark in Lincolnshire, 250 jobs at Seven Seas in Hull. It's about time the so called 'experts' stopped playing a numbers game and started coming up with clear plans to get the country moving and people into work. We are most definitely in a recession and people are hurting. Come on Cameron, do something.

  • rate this
    -2

    Comment number 99.

    Then take a really hard look at the real Olympic Legacy, many aspiring athletes rely on decent facilities provided by local authorities, what was that that Birmingham still had to do, save a further £600m. Lord Coe, you're Tory buddies have dupped you my son, duped.....

  • rate this
    -1

    Comment number 98.

    @36.CassForQuestions

    If you can't even title your artice correctly (confusing 'then' with 'than'), I think you're out of your depth here.

  • rate this
    0

    Comment number 97.

    Bruce, post 66, If you read behind the headlines the write downs for Santander were in Spain and actually Santander UK made over GBP 300 million profit in the last quarter.
    Mr McNibbles post 50. You answered your own question. Ford is losing money in Europe. The UK is one shining light.
    http://www.bbc.co.uk/news/business-19958512

  • rate this
    +1

    Comment number 96.

    Guess what; there is no more room to grow. we're struggling for growth when our economy is already unsustainably large. We will flail around desperate for growth that will only make the next crash that more dramatic.

    Forget growth, lets make our economy sustainable, steady and inclusive. Reduce consumption, unemployment and income disparity and create an economy that can survive in the future.

  • rate this
    +8

    Comment number 95.

    The comments (epecially those of the BBC journos) reflect political dispositions. If you are Labour (or BBC, not much difference) you simply can't accept that the recession is coming to an end. For you, good news is bad news. And it has to be "interpreted" in such a way that you can go on moaning about "the Tories". The fact is things just aren't as bad as all that. Get used to it.

  • rate this
    +1

    Comment number 94.

    Why doesn't the government doesn't create 3 or 4 new banks with £0 capital. These banks would be in an infinitely greater financial position than the current bankst and would hopefully completely put the current banks out of business. It doesn't matter if all of the savings accounts are lost because the money doesn't exist, government can just type the amount into the new excel spreadsheet.

  • rate this
    +17

    Comment number 93.

    I visited Lond during the Olympics. The difference between London & the rest of the UK especially the North is stark.

    It wouldn't surprise me if London was growing at 6% + but the rest of the country is dead or declining

    Growth in London seems based on its international reputation, construction projects, booming housing market & high numbers of visitors

  • rate this
    +13

    Comment number 92.

    Despite the cynicism & the moaning sooner or later in will be indisputable the necessary reality check ie - rebalancing public/private sector,getting long term unemployed back to work, reducing the impact of the bloated benefits culture- has been a good thing & will give our children the prospects of jobs in a global economy rather than bankruptcy through our current excesses.

  • Comment number 91.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    -32

    Comment number 90.

    The olympics was because of the 1000,s of unemployed voluntary helpers which received no pay. The tax payers money was paid to the conservative,s for doind nothing. I bet 99% of the volunteers were Labour voters who worked for the counrty and the olympics thats what people can do if they want to work no rich person got of their arse and did a thing except claim the cost of their ticket back.

  • rate this
    +5

    Comment number 89.

    Unbelievable nonsense posted by the left leaning supporters of the bbc - how gutted are you all that there's good news to report ?

  • rate this
    +4

    Comment number 88.

    Good stuff from Cameron and Osborne. The last Labour government left us bankrupt but we are gradually emerging from the rubble.I don't think the Olympics had much to do with these numbers. I seem to recall the BBC saying they would have a negative effect.

  • rate this
    +4

    Comment number 87.

    I know this might seem a silly question, but can someone tell me why it takes 2 periods of negative growth to enter a recession, but only 1 period of positive growth to exit?

  • rate this
    +4

    Comment number 86.

    The BBC continue to find negative comment and negative people. The Conservative policy is the right way forward its not perfect but Ed Balls and the Labour Party have no alternative but to spend more money the country hasn't got. Come on BBC be even handed.!!!

 

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