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 925.

    Now all we need is some more affordable housing, realistic interest rates at the banks, Lower food and fuel bills, and an NHS that actually treats patients.

    1% is a good start, but it's nowhere near the end of the downturn.

  • rate this
    0

    Comment number 924.

    #865: "Another Oxford/Cambridge PPE type giving their 'opinion' on whats really happening and how we should all live our lives."

    Right-on comrade - we should never pay any attention to intelligent people who've been educated at two of the very best universities in the world. Power to the people!

  • rate this
    0

    Comment number 923.

    We don't make high volume consumer goods, this country buys from China and sells at extortionate mark up prices. This is what sells in the millions, phones, ipads etc. all needing service industry support. When all the new gimmicks arrive people flock to the shops, get new contracts, internet accounts, insurance etc. The rush is over, essential items are going up in price - all false growth.

  • rate this
    +3

    Comment number 922.

    ...err this is a London economic growth - brilliant. Let's all move to London then - better start converting garages and garden sheds to house all the economic migrants. Oh - I forgot that's already been done - maybe a few tin shacks along the Thames then.

  • rate this
    +3

    Comment number 921.

    Learn from history.Every departing Labour Govt. has left an appalling financial mess which the incoming Conservative Govt. has had to clear up.Socialists simply spend,badly,other peoples cash,that is all they ever do.I eagerly await a firm policy statement from Miliband/Balls as to how they would create jobs etc.

  • rate this
    0

    Comment number 920.

    I hope Osborne, for his own sake, does not assume the GDP figures to be self-sustaining growth when he makes his Autumn statement. Currently his plan is to increase the rate of govt cuts from 0.5% to 1.5% of GDP next financial year. Does he now admit that the State's role in the economy (Olympics) can make huge impact on GDP?

  • rate this
    +4

    Comment number 919.

    The stimulus and indeed balance needs to come from a wider choice of industries.

    Labour and the Thatcher/Major Tories put too many of our "eggs" into the financial sector. We need R&D, research, IT, manufacturing and assistance to encourage this innovation as well as a financial sector.

    A wider industrial base helps ease economic problems in the future and gives far wider career choices.

  • rate this
    +1

    Comment number 918.

    907.annieavatar
    **
    Possibly. Realistically i dont think any party is going to get a recovery exactly right.When Labour were in power the extent of the problem was never all that clear, so if they get in again at least we will be able to see how their policies work vs what Cameron is doing. I have my own views, but quite frankly i'll take anything that works

  • rate this
    0

    Comment number 917.

    Only place out of recession will be that country thats in England{LONDON}

  • rate this
    0

    Comment number 916.

    Only Mugs and coalition supporters with short memories will buy into this.
    There are no more olympics or jubilees in the pipeline.

  • rate this
    +1

    Comment number 915.

    Labour can't be trusted with the economy? Got some very short memories on here this afternoon, so I shall refresh them Norman Lamont any given black Mondays Tuesdays or Wednesdays RING A BELL? Now I must pop off been a tad hot today I think about 34c the BBQs on & the sun is still out. Adios mucho gracias

  • rate this
    -1

    Comment number 914.

    903.Political 'Comments 883 and 868 sums up Tory lies/spin fairly well but don't let facts get in the way'

    I'm sorry I must've lied, so what you're saying is Dennis Healy never went to the IMF to get a bailout & Labour did not leave a deficit of £150bn in 2010. I'm obviously letting facts get in the way of the truth or are you a historical revisionist like Ed Balls on the daily politics?

  • rate this
    -2

    Comment number 913.

    872.McGill

    "But you are happy to believe Cover-up Cameron, when it is quite clear he is just plain lying"


    No, although I would question how you prove he is clearly lying?

    I consider Cameron, Osborne, and most of the Cabinet to be incompetent, although I believe the policies are about right.

    Sadly, by comparison, Labour are even worse, which makes me very worried

    878.Clive Hamilton SPOT ON!

  • rate this
    -2

    Comment number 912.

    Any celebration at this news is premature, we are still in the sh*t. Our major trading partners are all suffering with economic downturns and the previous government left the kitty empty to be able to do anything about it. The legacy of the Gordon Brown shambles will last for years, we’re only able to fire blanks due to his over-spending but unfortunately the Tory’s will get the blame.

  • rate this
    +2

    Comment number 911.

    Oh joy - after 3 years of this useless government, we are now back, thanks to the Olympics, at where we were in April 2010, before the last election.

    Let's hang out the bunting.

  • rate this
    +2

    Comment number 910.

    So according to IDS feckless benefit scroungers with multiple kids cost the country £5Billion a year have drug & alcohol problems & vote labour.I doubt they are in a fit state to think never mind vote. The only good news will be next Thursday when this present shower lose Corby and hopefully their deposit. Greedy bankers & their Tory supporters caused the recession none of them prosecuted yet

  • rate this
    -1

    Comment number 909.

    What a shame that the chain smoking, beer swilling, brigade are going to vote New Labour back in at the next general election so that they can mess everything back up again.. Will they never learn. If anybody with a job and their own house votes NL they must be insane.

  • rate this
    0

    Comment number 908.

    @904 selhurstboys 80% of GDP? I was gonna say diminished returns, but that would be a freefalling disaster!

  • rate this
    +4

    Comment number 907.

    898.Trevor
    Hi Trev - agree about the inflated everything in the UK - from house prices to wages. Thet did not help. But we were encouraged to spend, spend spend, get into debt with litle regulation and now we are stuffed.

    Sold my soul to the company store?

  • rate this
    +5

    Comment number 906.

    something good better of come from the olympics, all I saw was prices going up in London to abuse the people that were coming over for the Olympics, combined with the packed commute it was not a happy time for us Londoners

 

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