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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  • rate this
    +1

    Comment number 145.

    It is great that the economy has grown. No-one would argue with that. But for politicians to come out claiming it is a vindication of policies is laughable, and arguably naive. Can we see 3 or 4 quarters of similar growth before we start celebrating. The reality is, things are still very tough and a bounce on the back of the "Games" was inevitable.

  • rate this
    0

    Comment number 144.

    The clue is in the headline: "UK economy returns to growth with help from Olympics". The London olympics was won with much backing from the then LABOUR government, so the small boost to the economy was always going to happen at this point anyway. It is NOT something for which the tories can claim credit.

  • rate this
    -2

    Comment number 143.

    83 mja

    "went to the job centre and recieved paperwork for 42 potential jobs. 40 of which were under 16hrs a week!"

    Oooh, now thats a tough one to solve. What can be done? Umm, yes, thinking, thinking...hmm...oh yeah, got it!....tell him to take 2 jobs!

  • rate this
    +1

    Comment number 142.

    What happens next depends on the figures for the next 2 quarters, assuming there are no major events to disrupt them.

    If the growth persists, and things improve with regard to unemployment, then this government will be hailed by the right as the one that ended the recession.

    If we return to recession then there will be more unrest than ever and a Labour landslide in 2015.

  • rate this
    +3

    Comment number 141.

    Everyone is always so negative. We haven't seen 1% growth for over 4 years so surely this is a positive? What's done is done, lets all just stick together and move forward.

  • rate this
    +2

    Comment number 140.

    If I see one more comment stating that the Labour Party were responsible for the WORLD recession, I will probably scream. However no one will hear me, or take any notice, because like the present incumbants in Downing Street, they probably think if you say something often enough, it becomes true.
    We are not out of the woods yet-by a long long way

  • rate this
    +2

    Comment number 139.

    @99.redrobb, strange that when the council was under the coalition they didnt need to make these drastic cuts, yet under labour these are being announced. call me a skeptic but isnt this a political party scoring points using ordinary peoples lives and scare tactics.

  • rate this
    +1

    Comment number 138.

    Bearing in mind they inherited growth took us back into recession as a direct result of their policies (and business men not working hard enough also cited by a Mr Hague) they shouldn't be too smug.

    If it carries on throughout the next 4 quarters I may believe we have turned a corner.

  • rate this
    +7

    Comment number 137.

    @120
    I think you'll find that the current economic situation is the fault of greedy bankers AND the previous Labour Administration, who stood by and idly watched them generate lots of revenues which were taxed and spent, and spent, and spent.

  • rate this
    +3

    Comment number 136.

    I would like to remind everyone that "One swallow doesn't make a summer". Please bear in mind that the bulk of this government's cuts are still to come through and this will tip the economy into recession again. this is a temporary boost from the Olympics. Even the head of the CBI says the economic benefits are concentrated only in London.

  • rate this
    -1

    Comment number 135.

    Out of recession my arse, were still in the greatest Depression since the 1930's.

    GDP is 15% less than what it was in 2008. these little blips are meaningless if you don't look at the bigger picture.

    Lets see how smug Cameron and Osborne are next year when everything goes belly up...Europe crashes, War with Iran pushing up oil prices and inflation sky rocketing.

  • Comment number 134.

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

  • rate this
    +2

    Comment number 133.

    Noticable that we can't comment on any articles concerning JS?

  • rate this
    +2

    Comment number 132.

    GDP means nothing to me, I am earning 10k less than 3 years ago food is more expensive my car is £20 more to fill up than when i got it, all bills are through the roof and I pay more VAT.

    Interest rates are artificially low because the gov and bank of England know if they put them up they will bankrupt half of home owners in the country.

  • rate this
    -21

    Comment number 131.

    whats interesting is labour were in power when it happened but you can see there was still growth after it happened then coalition came in and boom it dropped

  • rate this
    +9

    Comment number 130.

    72. JohnL: " Please can we have the Olympics every quarter"

    Your figures are strange to say the least. The annual GDP is £1.5tn (not £2tn per quarter) so even if all of the 1% growth was down to the Olympics it would amount to less than £4bn. As the Olympics cost over £9bn they did not make UK PLC £10bn, or indeed anywhere near that much!

  • rate this
    +3

    Comment number 129.

    Try telling Fords soon to be ex-workers.

    Frankly this is all bull - we know that the wealth creating manufacturing sector has been decimated by a combination of very poor policy decisions from both Labour and Conservative governments over the last 3 decades.
    UK workers losing their Ford van making jobs after LDV closed... while councils, police, army, government buy Mercedes in HUGE quantities

  • rate this
    +4

    Comment number 128.

    So the Olympics contributed towards 1% of GDP over 2 months?

    I thought Ken Livingstone told us that this was going to be a massive profit earner and would only cost us a few walnut whips.

    When do I get my money back?

  • rate this
    +2

    Comment number 127.

    It just goes to show that adding extra bank holidays and events associated with them help the economy rather than hinder it.

  • rate this
    -11

    Comment number 126.

    Just one sentence. `One swallow a summer does not make'.

    Part time employment at its highest, youth unemployment at its highest. Peoples marginal propensity to spend at it lowest. Get real, we are nowhere near getting out of a recession.
    All this `end of recession' nonsense is just tory twaddle.

 

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