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
    0

    Comment number 945.

    The economy will just about have recovered in time for the next Labour government to ruin us again.

  • rate this
    -1

    Comment number 944.

    Good to see the BBC for once actually putting the good news from the Government first.

    But why on earth does that idiot Ed Balls still keep being taken seriously?

    He was one of the architects, with Ed Milliband, of the disasterous economic policies and ever increasing light touch regulation of the banks under the last government,and yet he is still seen by the BBC as some sort of economic guru!

  • rate this
    +3

    Comment number 943.

    Why not draw a line of best fit through the tops of the bars on the graph from mid 2010 when Westminster rang with the cheers of Tory MPs for George's "slash and burn" budget.
    The line shows an inexorable slide into an economic hole where there is insufficient domestic demand to stimulate growth. The stupidity of an "austerity" solution applied internationally has given us a "race to the bottom".

  • rate this
    -3

    Comment number 942.

    @916.justin de shed
    "Only Mugs and coalition supporters with short memories will buy into this.
    There are no more olympics or jubilees in the pipeline."

    Come back and comment next quarter and lets see if you are right. Short memories? we still live with the wreckage 13 years of Labour Gov't left behind and will take a number of years yet to fix.

  • rate this
    -5

    Comment number 941.

    926.Zidane
    Cost of Iraq War to UK £9.24bn, Afghanistan £20bn, Libya £1.75bn

    How naive some people are. Where did this money go? Soldiers salaries maybe? UK defence industry is a big employer, maybe some went on that? Much of this "cost" is "income" to others in the UK and is not lost.

  • rate this
    +1

    Comment number 940.

    Growth is growth. Not something to qualify with a statement to show off their political allegiance. If its due to the Olympics, so be it. Its just a reflection of what the country did in the last three months. The way people go on about it, like Dave said in PMQs yesterday about the opposition, is that people would welcome bad news as way of boosting Labour's chances. Twisted.

  • rate this
    0

    Comment number 939.

    Hooray!

    ...but does it really matter to anyone other than financiers, politicians and the media? It's a ridiculous, crude gauge used to measure the 'health' of an economy.

    Provided unemployment is low (which it is) exports are steady (which they are) inflation is modest (which it is) and businesses can borrow to assist research, development and cash flows (which they can't) - everything is OK!

  • rate this
    +5

    Comment number 938.

    The 'economy' may have grown, but my pay hasn't.

  • rate this
    +2

    Comment number 937.

    @892.Shropbrew

    While I feel sorry for you, the demise of the High Street isn't exactly relevant to these figures. Its demise was happening long before the recession

    High street equals high pricing, high parking charges or little to no parking. Thats why the majority now stick to out of town shopping parks or the dead cheap internet

    During financial hardship, who would high street shop?

  • rate this
    +2

    Comment number 936.

    Of course their is always the real cost of the 'successful' 1% to consider and, who is actully paying the price. I have mentioned before the 200,000 currently on food handouts, doubling each year, the 5.2 million on housing lists, the 32,700 rough sleepers, the OAP's who can't afford to cook or heat their homes, the 2000+ new unemployed each week etc. Feel free to ignore these millions of people

  • rate this
    +1

    Comment number 935.

    Great news, an oil tanker turns slowly,especially when it had previously been steered in the wrong direction for so long.
    Jobs losses are inevitable in certain diminishing industries, whatever happened to lamplighters?
    We need to be competitive for the emerging industries that will replace these losses -may mean retraining for some people rather than trying to subsidise outdated industries.

  • rate this
    -2

    Comment number 934.

    It's clear that many posters on here don't want to hear any good news because it doesn't fit their political agenda.

    Let's face it, the last thing milibandwagon and his delusional supporters want is economic growth, because it means they haven't got a snowflakes chance in hell come the next election.

  • rate this
    -3

    Comment number 933.

    The BBC are always looking for a negative, why can't you just report the good news?

    The BBC from day 1 of the downturn have rejoiced in this recession, we are not all champagne socialist, show some responsibility.

  • rate this
    +2

    Comment number 932.

    Ed Balls interview - 1st ten minutes is brilliant.

    http://www.bbc.co.uk/iplayer/episode/b01nmjzj/Daily_Politics_25_10_2012/

    He ends by admitting that they didn't know they had a £73,000,000,000 deficit in 2007. Speaks volumes about economic compitence - £73bn must be small change Ed eh!

  • rate this
    -1

    Comment number 931.

    914. magentaobscura
    I'm sorry I must've lied, so what you're saying is Dennis Healy never went to the IMF to get a bailout.
    +++
    It was Healy's astute handling of the economy in the 70's that laid the foundations for Maggie's ''miracle'' of the 80's which we're still reaping the ''benefits'' now.

  • rate this
    +4

    Comment number 930.

    I would seriously embrace this news with caution. One quarter of growth at 1% doesn't really mean any serious change. In Macro-economic terms this is rather insignificant. We have an entire economy to re-structure and massive national debt levels along with a large trade deficit, 1% of growth isn't really a milestone.

  • rate this
    +2

    Comment number 929.

    As IDS is so good at getting dow to the grass roots looking at benefit costs and how we need to reduce them, perhaps call me Dave can move him to the Treasury and allow him to apply his skills and concentrate on the Banks & COL who have pocketed £Billions in benefits through fraud, corruption & theft, or would that be too damn obvious for this bunch of self serving idots in government.

  • rate this
    +4

    Comment number 928.

    There's no denying this is good news-we need growth, but is this a one-off?
    I'd say it was-it's not every quarter you get the olympics to help, but we still have to endure more cutbacks. Christmas may help as well, but don't rule out more negative growth
    But now the olympics is over, what will happen to unemployment? We hear Ford is cutting 1400 jobs-the outlook is still murky

  • rate this
    +5

    Comment number 927.

    At last some decent news on the Economy, in my view although this may not be the harbinger of permanent good news its atleast a sign of some improvement in weather conditions. I for one this is owing to the hard working men and women of the UK rather than any tory policies. The fortitude with which all of us have weathered the bad weather is commendable and hope that people out of work get work.

  • rate this
    +3

    Comment number 926.

    Cost of Iraq War to UK £9.24bn, Afghanistan £20bn, Libya £1.75bn

    Total cost to UK £30.99bn

    The economy has risen by 1% for just £12bn investment, if we didn't go to the pointless wars the U.S started the UK economy would have risen by just under 3%. Proves the fact that had we not have a poodle to the US we would have been far better off.

 

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