Reaction to release of latest UK GDP data

Key Points

  • The UK economy avoids a triple-dip recession after it grew by 0.3% in the first three months of the year, according to figures released on 25 April.
  • The figure means the economy avoided two consecutive quarters of contraction - the definition of a recession
  • A triple-dip recession has not happened in the UK since records began in the 1950s
  • The UK economy is still smaller than it was before the onset of the financial crisis five years ago
  • Chancellor George Osborne said the figures were an "encouraging sign" but Labour's Ed Balls described them as lacklustre

    Welcome to our live coverage of the release of the latest GDP figures for the UK economy. At 09:30 BST the Office for National Statistics will reveal how the economy performed in the first three months of 2013. If the economy contracted, then it will mean that the UK has entered its third recession in five years.


    Ahead of the announcement, BBC News economist analyst Lewis Goodall has been examining the background. "The initial 2008-09 recession was so large, so overwhelming, that the economy still lives in its shadow," he writes.


    What is GDP? GDP or gross domestic product is the key guide to an economy's performance. If you would like a more detailed answer, check out our Q&A.


    Economist Rob Wood tells the Reuters news agency: "The chance that you see a small contraction... is pretty big. But I don't think this would change the underlying picture of an economy that has gone nowhere for 18 months and is struggling with some big headwinds."


    Although, a second quarter of contraction would put the UK back in recession, on average, economists are forecasting growth of 0.1%. A poll of analysts by Reuters resulted in forecasts ranging between a contraction of 0.2% and growth of 0.3%. See more background in our news story.


    BBC Breakfast business correspondent Steph McGovern presented a video explainer to the GDP announcement earlier.


    Even if the UK does slide into a triple dip recession, things could be much worse. The latest unemployment rate in Spain has hit a record 27.2%, compared with 7.9% in the UK.


    The markets appear relaxed about the release of the latest GDP data. The main UK share index, the FTSE 100, is currently up 0.2%.

    09:16: Mick in Leeds emails:

    I heard a company director on 5 Live this morning talking about his business. He hit the nail on the head. He said these figures have no impact on the strategy of his business and are completely meaningless as they are not based on all the information that affects GDP. Too true. Something for the press to get their knickers in a twist over.


    Conservative MP Mark Field tells the BBC that whatever the GDP figures show, George Osborne should not deviate from his plan to cut the deficit, the so called "Plan A".


    Speaking on BBC Radio 4 Today's programme, BBC chief economics correspondent Hugh Pym said there's a lot riding on the figures politically. It would add to the pressure on Chancellor George Osborne after last weeks suggestions from the International Monetary Fund that the UK should slow down the pace of austerity measure. Our correspondent said a positive figure will give the chancellor some breathing space even if the small amount of growth expected by most economists will not be much to write home about.


    Since 2007, the UK economy has been in recession twice, during 2008-09 and 2010-11. In the final quarter of 2012, the UK economy shrank again - by 0.3%. Stephen Blackman, head of consumer economics at RBS, told the BBC the ONS figures were preliminary but would be a "good signal of the current health of the economy".


    The currency markets appear to think the UK will avoid a triple dip recession, with the pound up slightly against the dollar, rising 0.2% to $1.5302 in early Thursday trading. However, analysts said sterling would likely fall if the GDP data disappoints.

    0929: Chris in Hereford emails:

    We import and sell furniture online. We are a small business but have ridden the recession without any difficulty. If there has been an impact it is that growth is sustained but slow.

    0930: Breaking News

    UK economy expanded 0.3% in first quarter of 2013, says the ONS.


    Year-on-year, GDP was 0.6%, the strongest rise since the end of 2011, says ONS chief economist Joe Grice.


    The ONS says the growth was led by the services sector, everything from shops to banks and restaurants

    Simon in Basingstoke emails:

    Does anybody really believe they can accurately calculate economic output down to the nearest 0.1% given the size of our economy? 0.1% growth? Ridiculous. We are not stupid despite what politicians think of us.

    0935: Stockmarket historian David Schwartz

    tweets: Lots of positive commentary about UK quarterly GDP rise. But it does not change the fact that the UK economy remains deeply troubled.


    Chancellor George Osborne says the figures are "an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress".


    Mr Osborne adds: "The deficit is down by a third, businesses have created over a million and a quarter new jobs, and interest rates are at record lows. We all know there are no easy answers to problems built up over many years, and I can't promise the road ahead will always be smooth, but by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future."

    0941: The BBC's chief economics correspondent Hugh Pym

    tweets: triple dip averted according to these GDP figures - 0.3% growth - though could be revised when new data comes in

    0943: Jayne in Southend

    texts: I've had to lose hours at work as have many colleagues and friends in different jobs. My savings are shrinking and everything keeps going up! Of course I'm not going to get into more debt and I'm really careful what I buy. I get a real buzz now when I find a bargain and I don't think I'll go back to my old shopping habits even when things get better.


    The figures show that the construction sector remains weak, contracting 2.5% in the first three months of the year.

    09:46: Mike in Gateshead emails:

    Double dip. Treble dip. Have any of you people ever ventured north of the Watford Gap? Here in the north east we're still in the first one.

    0949: BBC Newsnight economics editor Paul Mason:

    tweets: The GDP tell us that if we fix construction we could be having an actual recovery: if it were even flat economy would have grown 0.5 in Q1

    0951: John in Canterbury

    emails: In view of a very poor quarter weather-wise which must have put some drag on the economy a figure of 0.3% for the quarter seems an omen of significant growth to come. Good news indeed.

    GDP graphic

    Updated graph charting the economic performance of the UK since 2007. It shows that the economy as a whole is 2.6% below the 2008 peak.

    0953: Daily Mirror associate editor Kevin Maguire

    tweets: Party time around the extended Cabinet table at no triple dip recession. There was a time when 0.3% was a poor figure


    Speaking on LBC radio, Deputy Prime Minister Nick Clegg says the figures are "a better number than I think many people had been anticipating, but it's one number for one quarter. We haven't triple-dipped, so that's obviously a welcome thing, but I don't want anyone to think that somehow we are out of the woods yet."

    0957: Stephanie Flanders Economics editor

    tweets: Figures are good news but also show how far UK is from re-balancing. It was the services sector that won it. Manufacturing and exports feeble.

    Stephen in Hertfordshire

    emails: There will be those ready to talk this down for their own agenda. From my perspective any growth however small is a good thing as it good for us and our country. We now need to focus on building new markets outside Europe and continue to bring the benefit bill down and the deficit...


    According to the ONS, the figures show the impact of the snow at the start of 2013 was not as bad as feared. While weather affected High Street figures, this was offset by a boost in energy demand from households during the cold snap


    BBC chief political correspondent Norman Smith says there must have been a "huge sigh of relief within Number 11".


    ONS chief economist Joe Grice Chief explains the significance of making a preliminary estimate of GDP in this article for us. He notes: "Preliminary estimates have proven to be remarkably accurate.... the revision between the first and third monthly estimates is typically only one or two tenths of one percent".


    Joe Grice, the chief economist at the Office for National Statistics, said: "Today's figures seem to be not out of line with the pattern now of the past few quarters of an upward trend in the economy overall, but still a relatively shallow one and one which to date has been quite bumpy."

    1008: Martin in Sutton Coldfield

    emails: Talk of growth is meaningless until we have an industry. Do we take off the brakes and put money into the economy so that people can go out and buy Chinese computers and phones, German cars, and Korean TV's… how will that help us?

    1011: Gary in High Wycombe

    emails: The economy now needs a kick start - tax credits for construction, reduction of VAT to 10% on building materials, reduction in stamp duty to boost the housing market, re-introduce the scrappage allowance for older cars/vans/trucks to boost vehicle manufacturing, cut National Insurance for new jobs....there are loads of ways of improving things!!


    Analysts say the better-than-expected GDP figures will lessen the prospect of the Bank of England opting to introduce more quantitative easing. Meanwhile, on the markets, sterling continued to rise to a two-month high against the dollar - up nearly 1% at $1.5414 - while gilts fell. The euro fell to a three-week low of 84.57 pence to the pound. Meanwhile, the UK's main share index, the FTSE 100 was flat.

    1015: Hugh Pym, BBC chief economics correspondent

    tweets: A bit more GDP detail - dominant services sector did most of work with 0.6% growth - also oil and gas output boost with cold weather


    Nick Bate, UK Economist at Bank of America Merrill Lynch Global Research, says: "The somewhat stronger than expected growth in Q1 GDP, taken alongside the expansion of the Funding for Lending scheme yesterday, add to the view that the Bank of England will not expand QE further at their May meeting."

    1017: Christopher in Slough

    emails: The BBC headline should read "Narrowly Avoided Triple Dip". Figures can be revised up or down. So this figure could be revised to zero. This is not growth by any stretch of the imagination, it is stagnation at best.


    Vicky Redwood, UK economist at Capital Economics, was upbeat about the GDP data. "Today's figure offers some hope that things might finally be starting to move in the right direction again," she says.


    Business Secretary Vince Cable says: "We've always said the road to recovery would be a marathon, not a sprint. Today's figures are modestly encouraging and taken alongside other indicators such as employment figures, suggest that things are going in the right direction. However there is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports."

    1021: The Guardian's Michael White

    tweets: Good to avoid blow of triple dip: real mystery is why, even with No 10 exaggeration, jobs are rising. Is recovery better than stats detect?

    1023: Jeremy in Bampton

    emails: For my manufacturing business employing 50 the outlook is much better than even these figures suggest. Stick to the medicine George.


    John Longworth, director general of the British Chambers of Commerce gave a balanced response. He said: "The fact that the UK economy avoided negative growth is encouraging and will boost confidence." Yet he added that "growth is still unacceptably weak, and will remain so without radical measures to get the economy moving".

    1027: Bugzy in London

    emails: Everybody knows what China does - they produce things that we all need and not things that we are forced to buy. UK really needs to make something, construct houses, produce things, grow things, export real things... get it Osborne?


    The GDP figures are "unspectacular" but will take the political heat off the chancellor, writes the Guardian's economics editor Larry Elliott. "As the Office for National Statistics noted, the economy is no bigger now than it was 18 months ago - a point Ed Balls will no doubt be making over the coming weeks and months".


    The Federation of Small Businesses says: "We hope this news gives small business owners the confidence to invest and create jobs. While much of the growth came from the services sector, our own research shows these businesses lack the confidence needed to grow as people's spending habits change."


    Writing on the Spectator's blog, Isabel Hardman says "after the building tension over today's figures came a really rather good anti-climax".

    "That the first estimate of Q1 GDP figures recorded growth of 0.3% means Labour spinners have to work much harder on falls in certain sectors in order to get their points across, and that George Osborne and David Cameron can relax, knowing they've just been gifted more good feeling in their party until at least the local elections."

    1035: Robert in London

    emails: It's all about confidence and perception, so any positive GDP number is more than welcome. When both manufacturing and construction pick up we may then see the way out-of-the-woods economically.


    David Tinsley, chief UK economist at BNP Paribas notes the 0.3% increase was above market expectations. He says: "From a policy point of view the signs that the UK economy may be growing, albeit weakly, are probably enough to put to rest any chance that the Bank of England would expand QE in May."


    Ed Balls MP, shadow chancellor, described the latest GDP data as "lacklustre". He said the figures "show our economy is only just back to where it was six months ago and continue the picture of flat-lining we have seen since the last spending review. David Cameron and George Osborne have now given us the slowest recovery for over 100 years".


    Ed Balls adds: "This stagnation in our economy is the reason why people are worse off than when this government came to office. They took an economy that was starting to grow strongly, with falling unemployment and a falling deficit, and delivered stagnation, rising unemployment and £245bn more borrowing than planned. The government's economic policies have failed and Britain's families and businesses continue to pay the price."

    1045: Simon in Newmarket

    Our attention must turn to encouraging small technology-based start-ups - small companies can become big companies. We need to make more things and sell them abroad. To rely on banking/service sector and oil revenues is not the sensible thing to do.

    1048: Stephanie Flanders Economics editor

    tweets: Production sector of UK economy only grew at all because of bounce back in North Sea output. Manufacturing down 0.3%.


    Graeme Leach, chief economist at the Institute of Directors, says: "The GDP figures are good news just when we needed it. We shouldn't get too excited about 0.3% quarterly growth, but it does provide relief from all the doom and gloom."

    GDP date graph

    Here's a further update to our graph showing growth in GDP since 2007. This version reflects revisions for 2011 and 2012 included in the ONS announcement.

    1051: James in Birmingham

    emails: If only we had a car manufacturing base which could produce British equivalent (in terms of quality , reliability and price) of the BMW 3 Series/ Audi A4 series- so many British buyers would opt for the British option. Why oh why can't we do this? We need long term system fix to long term manufacturing in the UK. There is no positive narrative at the moment, just wishful thinking.


    More on those ONS revisions for 2011 and 2012. The figure for the first quarter of 2011 was previously stated at 0.4%, but is now 0.5%, while the fourth quarter of 2011 was -0.3%, but has been revised up to -0.1%. In the third quarter of 2012, growth has been revised down to 0.9% from 1%.


    John Cridland, director general of the CBI, said: "This is a welcome uptick which confirms our view that 2013 will see real growth. What Britain's economy now needs to see in the coming months is a recovery in manufacturing output, helped by a brighter global outlook."


    Terry Scuoler, chief executive of manufacturers' organisation EEF, says: "This is modestly good news. However, the economic challenges we face are shared by much of the rest of the world, particularly Europe, and are hampering manufacturing's efforts to export our way to growth."


    BBC chief economics correspondent Hugh Pym's analysis of the figures has just been added to our news story. "The overall picture, according to the ONS, is a flat economy. But the growth number was above expectations and there were no special factors like the Olympic effect to flatter the figures," he writes.


    Labour MP John Mann, who sits on the Treasury select committee, says the GDP figures are nothing to celebrate. "We're falling further and further behind our competitors and of course the big emerging economies - the Chinas, the Indias - they're galloping ahead of us. They're worrying if they're down to eight, nine per cent - they're seeing that as a crisis."


    The stock market continues to appear uninterested in the GDP data. The main FTSE 100 index was flat at 6,432, showing no percentage change.


    As a comparison to the UK figures, the German government has just raised its 2013 economic growth forecast to 0.5% from a previous estimate of 0.4%. The Economy Ministry in Berlin said it is keeping its forecast for 2014 growth at 1.6%.


    Interviewed on the BBC News Channel, shadow chancellor Ed Balls says "not being in a triple dip recession is better than being in a triple-dip recession" but the UK economy is not "strong and stable". He adds: "If this carries on for much longer I fear our country will continue to fall behind."


    Speaking to the BBC, John Mann MP added: "In Japan, their economy stagnated - sometimes it went down to below zero, sometimes just above it, but it kept on this very low-growth trend, and kept there for 15 years, and it's been a disaster for Japan. We are in the same cycle and breaking out of it will need a change of policy."

    1113: The Labour Party

    tweets: It's official, the Tories economic plan is failing and it's hard working families that are paying the price.

    1114: The Conservative Party

    tweets: Latest #GDP figures show the economy is going in the right direction


    Andrew Goodwin, senior economic advisor to the Ernst & Young Item Club, says: "It shows how low we set the bar that 0.3% growth comes as a pleasant surprise. Growth is still very unbalanced - but unbalanced growth is better than no growth. We are optimistic that this will represent the start of a more sustained recovery."


    The Unite union says the UK economy remains "in a coma". Its general secretary Len McCluskey said: "Today's figures showing miniscule growth are nothing for George Osborne to crow about. Despite the misery of three years of cuts and falling living standards, this government has brought us back to where we were six months ago."

    Graphic on Conservatives website

    Two different graphical takes on today's figures have been posted on Twitter by the Conservatives and Labour. Here is the the Tory interpretation.

    1125: Russell in Nottingham

    emails: This country will never recover from the debt we've inherited. It will never get repaid - it's way too high. We don't produce anything to sell to the rest of the world, and we will always have the huge welfare state bill. I think tough times are here to stay.

    Graphic on Labour Party website

    And here is Labour's graphical take for the attention of its Twitter followers.


    Joshua Raymond, chief market strategist at City Index traders, warned that Thursday's GDP figure could likely be revised in the second or final reading. "Therefore, today's data should be taken with a pinch of salt," he said.

    1132: BBC Newsnight's economics editor Paul Mason

    tweets: The GDP tell us that if we fix construction we could be having an actual recovery: if it were even flat economy would have grown 0.5 in Q1

    1134: Grant in Bury

    emails: This is really encouraging, the economy is healing and the tough choices are finally starting to work. It's a long haul, but we have to go through the pain to rectify the damage caused by the credit and housing boom and bust.


    The figures show that construction activity in the quarter was down 2.5%. The sector remains 18.1% below levels seen before the 2008 financial crisis.


    The full ONS statistical bulletin on the first quarter GDP figures comes in at 24 pages and is available as a PDF download on its website.

    1145: Andy in Wigan

    texts: An estimated 0.3% growth from figures which may be revised downwards? If this is something to be cheerful about, the Archbishop is right - we are in a depression. Anyone walking around with their eyes open has seen things getting worse in the last quarter. The sooner that George Osborne acknowledges this and spends some money to stimulate growth the better.

    1148: Richard in Nottingham

    emails: Comparisons for construction with pre-2008 crisis levels are misleading. 2008 construction levels were fuelled by absurd bank lending behaviour to create a real estate bubble. Longer term trends need to be considered to identify realistic levels of construction activity rather than the 2008 spike. Construction should be grateful for all the help that it is getting from quantitative easing, funding for lending etc without which the full effect of the correction would really be felt. Yes we need growth - sustainable growth - but not another bubble.


    Another analyst warning of a potential downward revision in the figures is Jason Simpson, UK rates strategist at Santander. "It looks like some of the assumptions the ONS made for the portion of the data that they don't have were quite optimistic," he says.


    Ambrose Evans-Pritchard, the Daily Telegraph's international business editor, says the government must do more to boost exports. He writes: "The UK trade data is frightful. The current account deficit is running at 3.7% of GDP, the worst since the Lawson boom of 1989. This is a structural problem for the British economy, and a very serious one. It will not be solved by cranking up demand, especially not by Labour's quick-fix of a VAT cut."


    Asked whether the prime minister was concerned that the main driver of growth appeared to be the service sector, with manufacturing and exports lagging behind, David Cameron's spokesman told reporters: "As part of a tough economic backdrop, clearly there are tough conditions in some of our major export markets, notably the eurozone."

    But he said: "In March, there was a positive contribution from manufacturing." He added: "As the chancellor has said, today's figures are an encouraging sign that the economy is healing, but there remains a tough economic backdrop."


    Ben Chu, economics editor at the Independent writes: "The growth, which was higher than most estimates from City analysts, will ease the pressure on the Chancellor who has come under unprecedented pressure recently to ease his austerity programme."


    Sandy McAllister, an architect from Dundee tells the BBC that business is very tough at the moment. She says: "I've run my architect practice for the past seven years and business is very tough at the moment. I am part of a profession that has and still is devastated by the recession. I have to run harder just to stand still."

    1221: Thomas in Colchester

    emails: Can I please state that 0.3% is essentially nothing. If you look at the growth figures since the first recession, you will notice that we are in stagnation. There is no money being generated by this economy because our chancellor is trying to use non-Keynesian economics to fuel the country's growth.


    The London Evening Standard's James Ashton reckons Chancellor George Osborne now needs to bend his own rules to get the economy growing. He writes: "There is much that can be done without deserting the tenets of austerity he has preached since 2010. And he would be forgiven for doing so. We have seen a mere 20% of the cumulative growth forecast at the time of Osborne's post-election spending review."

    1226: Rob in Perth

    emails: I don't know what all the fuss is about. I am 27-years-old and getting married this year. I have a beautiful two-year-old daughter. We are seeing our wages rise and our lifestyle along with it. We are moving into a new house, and we are not struggling at all. Tax Credits have increased and our bills are going down.


    If you would like a reminder about why we were worrying about the possibility of a triple-dip recession, this explainer looks back at the knocks that have hit the UK economy since 2007, with the help of photos and graphics.


    A blog on Prospect magazine's website assessing the GDP figures is entitled Stuck in a rut. Tony Dolphin and Amna Silim write: "In most circumstances, presiding over such a dismal economic outcome would be severely damaging to a government's standing, but this has not been the case for the coalition." They say the government's case has been helped by better-than-expected unemployment data and the fact that it "continues to frame the UK's economic crisis as a "public debt problem" rather than a "growth problem".


    The chancellor has been speaking to the BBC's economics editor Stephanie Flanders. George Osborne said: "These figures are an encouraging sign that the economy is healing and despite a tough economic situation, we are making progress." You can watch a clip of the interview here.


    Howard Archer, economist at IHS Global Insight, describes the higher-than-expected GDP figure as a "pleasant surprise", but says "it does not materially dilute belief that the UK still has a very tough job to generate even modest sustainable growth". IHS has raised its forecast for annual growth by 0.1% to 0.8% in the light of the ONS figures.


    We are going to bring our live coverage of the release of the latest GDP figures to a close now. Our news story will continue to be updated with reaction.


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