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
    -2

    Comment number 645.

    637. magentaobscura
    2 MINUTES AGO
    'The MMs dried up because no bank knew who was exposed to toxic american SIVs & were scared to lend to each other.'

    Quite.... where did that toxicity come from?

  • rate this
    +7

    Comment number 644.

    I'm coming to believe that Ed Balls is clinically delusional.

    As education secretary he presided over a series of crises (none of which he took responsibility for).

    As chancellor he was basically Brown's glove puppet, basically parroting his leader's economic fantasies.

    And yet he still seems to feel that he has valid political opinions & is a boon to his party.

    Bonkers.

  • Comment number 643.

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

  • rate this
    +1

    Comment number 642.

    How dare the Tories try to fix Britain.

    The lefties will not be happy, because the Tories are an excellent government. They'd be even better without the lib dems.

  • rate this
    -5

    Comment number 641.

    I don't understand why people are blaming the previous labour government for following neo-liberalist policies that have brought the Western World to the brink. These have been the same policies for over 30 years! and no I do not believe this is the end of capitalism or the recession.

  • rate this
    -1

    Comment number 640.

    We will return to a recession in the next quarter. Like someone else said before, people are losing they jobs, houses, families. People are struggling to put food on the table, fill they cars with fuel and even keep warm at home because its too expensive to do so.

    The banks are rubbish, our Mp's are rubbish and self centred. We need a major overhaul and proper distribution of wealth.

  • rate this
    -10

    Comment number 639.

    UK growth! What's it being driven, by a Ford van? Cos it ain't arrived in Yorkshire.

  • rate this
    +5

    Comment number 638.

    This is just one more bit of (good) news: a (good) statistic on the very long out of a very deep, black hole.

    No-one can make a judgement on this.

    The only clear fact is that we, and the rest of the world, have a huge amount of very hard work to do if we are ever to get back to stability and long-term growth.

    Fixing the Banking issues and having more accountability might be a good start!

  • rate this
    +1

    Comment number 637.

    607.Dan_Dover

    Tell me of an alternative that has not failed then?


    596.ukblahblahblacksheep

    How's wikipedia working out for you then?
    The MMs dried up because no bank knew who was exposed to toxic american SIVs & were scared to lend to each other.

  • rate this
    +1

    Comment number 636.

    618 John C
    " banks who have done remarkably well during the recession". Not really, around 10% of staff have been laid off in the City of London within the last few years

  • rate this
    0

    Comment number 635.

    627. LeftLibertarian
    JUST NOW
    590. paulmerhaba
    Don't a vast amount of the profits from the Olympics go to the IOC?
    Not sure on that one.
    The companies sponsoring the Olympics demanded and got an exemption from tax on the profits made from the Games though.
    --
    I must admit i am wondering how the olympics helped GDP, is there more creative accounting being done?

  • rate this
    +1

    Comment number 634.

    Rather than report this as good news, the Beeb felt the need to temper the news with some factory closures. Thankfully they didn't feel their usual need for comment from Balls or Millibandwagon. Perhaps they were embarrased by the good news or didn't want to blame the government for it.

  • rate this
    +1

    Comment number 633.

    The is very good news and I wasn't expecting growth to be this strong. Although some of it is probably due to the Olympics, quarterly growth of 1% immediately after a recession along with falling inflation and unemployment shows that the government is getting things right. It's a shame Ed Balls is still as pessimistic as ever, and it shouldn't be long before Tory poll ratings start improving.

  • rate this
    +16

    Comment number 632.

    A little early to get excited about one months figures. Once the Olympics and the jubilee have been taken into account it`s closer to 0.3% while in the right direction still means the economy is stagnating. I`ve just read that Ford is closing two uk plants so lets be realists here, one swallow does not a summer make and those bragging will only have to eat humble pie come the next set of figures.

  • rate this
    +1

    Comment number 631.

    @624. 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.
    -
    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.
    -
    That opinion poll doesn't say 70%+ of the population consider Osborne's plan isn't working.

  • rate this
    +6

    Comment number 630.

    How long will it be before we start hearing about the up-coming "tripple dip recession" from our wonderful media?

  • rate this
    -4

    Comment number 629.

    We have never had a true socialist system. The USSR was based firstly upon Marxism-leninism and was successful in fighting off a civil war and foreign intervention. The system that followed was Stalinist then Soviet. None of which were genuinely socialist.

    A true socialist system is based partly on capitalism ie for trade and a redistribution of wealth from Rich to poor.

  • rate this
    -4

    Comment number 628.

    As the old saying goes "Ive heard ducks fart under water before "!!! if anyone beleives this they will beleive anything...More Tosh from the masters of BS......

  • rate this
    0

    Comment number 627.

    590. paulmerhaba
    Don't a vast amount of the profits from the Olympics go to the IOC?
    Not sure on that one.
    The companies sponsoring the Olympics demanded and got an exemption from tax on the profits made from the Games though.

  • rate this
    +1

    Comment number 626.

    Out of Recession,Olympic effect, Bank Holidays, Weather, can you believe statistics, they are always revised up or down, if there is growth in the economy, then I would say that it is virtually all in the South East of the country, if you look at the Construction Industry it is in deep recession, therefore if nobody is building then growth will be minimal, Plan B is required urgently!

 

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