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.

Start Quote

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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  • rate this
    +6

    Comment number 125.

    I would not be so quick as to say it is coming to an end, it could be a case of up and down for a bit longer yet. Lets just hope the workers and the engineers and new start ups can keep it going. I'm neither a fan of Blue, Yellow or Red. Whilst the government can do some things in the end, job creation is down to individuals and companies not governments. Government can only spend others money.

  • rate this
    +2

    Comment number 124.

    Job done double dip over, next one the triple.

  • rate this
    +5

    Comment number 123.

    @7.BaldLea
    "The only growth the Tories have seen is a legacy from Labour"

    Well if thats the case then the 3 quarters of contraction that we had before was also Labours legacy

    I shouldn't be surprised, the amount of people that blame the Tories for every economic disaster yet they are totally ignorant to the fact that every since the 60's, every Labour government has left an economy on thin ice

  • rate this
    +2

    Comment number 122.

    Banks still not lending, unregulated energy prices still rising above inflation, and BIG badly thought out family benefit cuts planned for start of Q1 2013... We'll be back in recession by July next year !

  • rate this
    -1

    Comment number 121.

    Lorraine, Did you get off your backside and volunteer during the Olympics? Thought not!

  • rate this
    -1

    Comment number 120.

    It's about time that people realised the current economic situation is the fault of greedy bankers and not the previous Labour administration. The same greedy bankers that are using quantitative easing to recapitalise their own banks and choke off a recovery rather than lend to small businesses and home-buyers which would revitalise the economy.

  • rate this
    +70

    Comment number 119.

    Look, please can we drop the partisan party political comments? this is good news and, along with everyone else, I am as nervous about our future as the next person. I hope with all my being that this is the beginning of the road back from the abyss but we need more than one quarter to consolidate this, so please, let us work together as a nation to rise above name calling

  • rate this
    +2

    Comment number 118.

    As food/drink bought was sold at highly inflated prices I hear, by guess who, while many other businesses made huge losses. I totally agree with the idea of benefits for 2 kids only, they also need to address the problem of benefits for children abroad, many who only exist on forms but not in real life then there will be a bit more money to help in this, still to me, recession

  • rate this
    +1

    Comment number 117.

    Praise be, we are saved.

    Banks and corporates can start paying big bonuses and the government can cut the taxes for the rich whilst the rest of us scrimp by on half pay just to keep our jobs.

    Well done DC and team.

  • rate this
    +2

    Comment number 116.

    So the economy has grown by 1% well good news.
    The Omnishambles will be saying it proves their policies are working.

    If however,which most economists appear to expect, it falls back in the next year will they then be saying it proves their policies are failing.

    Not on your nelly they will go back to blaming Balls!

    Watch it down voted it's a busy day on HYS at Tory Spin central

  • rate this
    +35

    Comment number 115.

    I suspect this piece of news owes a lot to the Olympics effect. In reality, there is very low confidence out there in business and communities. After 4 years, most of us remain shell-shocked by what happened in the banks. Nothing has changed other than higher taxation, less work and real despair. I predict that Q4 will be nearer to zero growth. It will take another decade to sort the mess out.

  • rate this
    +2

    Comment number 114.

    I'm worried that so many people respond to "here is some good news" with pessimism, cynicism, or simply decrying the news as lies outright.

    If we want a self fulfilling prophecy, we can continue to wallow in self-pity - alternatively, why not take a positive outlook, and think about what each of us can do to improve matters?

  • rate this
    -1

    Comment number 113.

    If the Tories are hoping for a poll boost from this, they're very much mistaken. They have lost the trust of the electorate, due to their close relationship to City spivs, asset stripping, greedy corporations (G4S etc), tax avoidance by their donor pals, their close relationship to Murdoch etc etc. Also the stealth privatisation of the police / NHS, the redundancy of 16,000 police officers...

  • rate this
    +1

    Comment number 112.

    Tories, Labour what's the difference they are both useless and out of touch, waste money and target the wrong people for quick wins.
    The Olympics effect is now gone, see what happens in the next 4 quarters - probably same as the last 4!

  • rate this
    +22

    Comment number 111.

    This is encouraging news but dont be fooled that it remains very difficult in business and on the high street. We have a long way ahead to recover and it can it never be as it was pre-recession as the levels of debt will never be paid in our lifetimes. I still see people spending on credit cards as if nothing has changed.

  • rate this
    +4

    Comment number 110.

    Not convinced. I think we need to see another quarter before one can make any conclusions. The Olympics failed to live up to economic expectations, takings, visitor numbers, domestic tourism, the 'tat' wasn't even produced in the UK., exports to EU, US, Asia down. Don't see this could cause a recovery, when everywhere else the news is dire. Give it one more quarter before we start congratulating.

  • rate this
    +4

    Comment number 109.

    This isn't significant, but it won't stop politicians claiming credit for it. Inflation is also supposed to be down, but figures on paper do not equate to realities on the ground. My economy will have recovered when I'm back to earning what I was before, spending what I was before.. heck eating what I was before.

  • rate this
    +1

    Comment number 108.

    Very fragile and totally public (borrowed) funded growth from the Olympics. In the sector I work in most of our cusotmers are now calling this '2008 the second' with falling demand and firms closing. Unless growth is at least 2%-3% for a sustained period it will have little impact on the fortunes of most people. Bankers, Politcos and associated elite of course have nothing to fear.

  • rate this
    +2

    Comment number 107.

    Yeah right, pull the other one. Yes I'm sure the Olympics boosted spending in London and the Sth East. But lets see a breakdown of figures for the country Nth East, Nth West etc. I'll be the only part of the country that saw an increase is down south. It would be great if the 'countries' economy was improving but this is more figures with the result slewed because of just one part of the country.

  • rate this
    -2

    Comment number 106.

    I imagine all the MPs will get a generous pay raise for all the hard work they've done in helping the economy recover.

 

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