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
    +12

    Comment number 625.

    A story about a return to growth and immediately below it a story about 1400 Ford jobs going in the UK. This is the problem with growth stats, do you honestly think those 1400 people about to lose their jobs give a damn that the economy grew slightly? They don't. Normal working class people do not notice whether the economy grows or contracts.

  • rate this
    0

    Comment number 624.

    -No need I am capable of reading the opinion polls that routinely say 70%+ of the population consider Osborne's plan isn't working.
    --
    What opinion polls would they be then?

    Virtually all of them for the last Year Have a look at http://ukpollingreport.co.uk and you can read it for yourself.

    There's an election in Two Weeks in a Tory Marginal any bets who is going to win

  • rate this
    +3

    Comment number 623.

    and ford cutting 1400 jobs if you can that growth your a MP.

  • rate this
    0

    Comment number 622.

    Prior to 2008 both parties had similar economic policies
    2008 - 2010 neither party said what would be cut because of the election - it took the electorate that long to understand cuts had to happen
    Post 2010 both parties have similar economic policies - the difference was how fast to cut + tinkering with tax. More has been made of differences than there actually are.

  • rate this
    +1

    Comment number 621.

    when you say UK what you mean is London.

  • rate this
    +3

    Comment number 620.

    Good, lets keep it up. I am sick of the doom and gloom and everyone having no money.

    For one thing I am going to need a job soon. My youngest son is 19 months old. I've stayed home to raise him while his mum is a teacher but "tightening our belts" is becomin tedious now. Lets invest in technology jobs over the next couple of years as I would like to use my first class IT degree at some point.

  • rate this
    +1

    Comment number 619.

    Cover-up Cameron and George must be pleased with the news, stagnant growth, they will be able to justify the next tax cut for millionaires, after all it’s thanks to their personal sacrifices we are not still in recession.

    Well not till next quarter anyway, then I suppose it will all be labour fault again

  • rate this
    +33

    Comment number 618.

    Let's not confuse an small increase in GDP, distorted by large corporations (several of whom pay little or no tax) and banks who have done remarkably well during the recession, with the real people in the economy who are losing jobs, seeing higher fuel and food prices.

    Recovery is when these people in the economy see an improvement in their circumstances - not the 5-10% of those at the top.

  • rate this
    +3

    Comment number 617.

    There are those in this country who, like eeyore, look for the gloomy pessimistic downside to every situation. Recovery will come and this is a start.

  • rate this
    +5

    Comment number 616.

    Thank you torries. If you were in power for the past decade this recession would have never happened, there would be world peace and no poverty! If only those evil labor fellas would have never existed!

    I am not trying to downplay the government's achievement just hate those who blame everything on the previous one! Grow up! These two parties are more similar than you would like to admit!

  • rate this
    +3

    Comment number 615.

    595. magentaobscura

    If at first you don't succeed, learn from history and try again.
    Just remember, the essence of Communism is

    "communism deprives no man of the power to appropriate the products of society; all that is does is to deprive him of the power to subjugate the labour of others by means of such appropriation"

    Explain what is wrong with that when you have worked out what it means.

  • rate this
    +1

    Comment number 614.

    @599.steve, so an economy is suddenly supposed to kick into 3-4% growth, its never going to happen, and when it does theres normally a massive reblance, look at the tiger economies that did this in the 90's eventually they contracted rapidly. much like the Irish Tiger enconomy that recently imploded after beind sustained by companies borrowing more than they could afford.

  • rate this
    0

    Comment number 613.

    In the Humberside & N. Lincs area Seven Seas have announced it is closing it's factory, McCains is laying off workers and Kimberly-Clark (they make nappies) are also closing. The UK needs more babies to fill these nappies to save the jobs at Kimberly-Clark

  • rate this
    0

    Comment number 612.

    just about everyone is agreed that part of this growth comes from the Olympics.
    So What is the olympics in economic terms, its a fiscal stimulus of the type labout have been arguing for & that the Goverment has been arguing is bad because it costs money.

  • Comment number 611.

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

  • rate this
    +4

    Comment number 610.

    I find the whole growth thing meaningless.

    Would any of us notice the difference, in any real way, if the figures were half a per cent up, or half a per cent down?

    Course not.

    We should be measuring buying power, wages, debt levels, both personal and national.

    Don't the journalists and politicians realise? You can't just grow, year in year out. And even if you do, so what?

  • rate this
    +3

    Comment number 609.

    @598.Some Lingering Fog
    @571. steve

    -No need I am capable of reading the opinion polls that routinely say 70%+ of the population consider Osborne's plan isn't working.

    ---

    100% of the population don't know whether it is working or not.
    We will only know whether it has worked (or not) in several years time.

    Thinking something isn't working is not the same as it isn't working.

  • rate this
    +1

    Comment number 608.

    We have a little growth, good if that continues, well and good. Over the next 20 years there will be little growth and we will see an overall decline in our standard of living, which ever government is in power, it can be no other way and if any government tries to create growth we will end up like Greece

  • rate this
    0

    Comment number 607.

    @595.magentaobscura

    Criticising communism (Marx's alternative to capitalism) is not the same thing as refuting Marx's critique of capitalism. Conflating the two things is simply dishonest. I'm no commie (or Marxist for that matter) but only the willfully stupid would deny Marx made a few good observations about flaws in the capitalist model.

  • rate this
    0

    Comment number 606.

    586 Avalon
    Let's hope you never loose your job or need support. You seem to think that everyone claiming benefits doesn't want to work. Get in the real world. Thousands if not millions of people are looking for jobs that aren't there. Do you want them to live on the streets like in the US that has a similar mindset. I thought we were better than that in the UK.

 

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