Fears that the economy could plunge into a shock triple dip recession have been allayed as official figures have indicated that the economy grew 0.3% in the first quarter of 2013.
Chancellor George Osborne welcomed the latest release in the preliminary estimates from the Office for National Statistics, saying: “Today’s figures are an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress.”
“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.”
Business Secretary Vince Cable said: “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, which I am doing now on my visit to Brazil.
“These issues all need to be addressed before people feel like the economy is genuinely starting to recover.”
Jeremy Cook, chief economist at the foreign exchange company, World First, said: “Today’s sunshine fails to mask the dark clouds that are still gathering around the UK economy.
“Inflation is too high, consumer demand and business investment too low, and the yoke of austerity remains a crushing presence. The numbers also show that the UK economy has, in effect, stagnated for the best part of two years despite £375bn of asset purchases from the Bank of England, the lowest interest rates on record for the longest period of time in history, and countless budget cuts in the fiscal space.
“Inflationary pressures may weaken through the summer if the tilt lower in commodities continues, but real relief will only come when wage demands start to pick-up; a distant prospect at the moment.
“Coalition politicians will crow about this figure, but just because we have stopped sinking doesn’t mean we’ve stopped drowning…”
Ian Stewart, chief economist at Deloitte, warned: “These numbers are less impressive and less important than they seem. GDP growth is erratic and first estimates of growth are often prone to large revisions.
“The big picture is of an economy that has grown by just 0.4% in the last 18 months. The UK economy is past the worst, but the outlook is still for choppy, sluggish growth through the rest of this year.”
Critics have warned that these estimates could be revised down at a negative date.
ONS warns the growth figures do come with a “margin for error” – You don’t say!
— steve hawkes (@steve_hawkes) April 25, 2013
Is this the moment to point out that the ONS’s initial GDP estimate isn’t a great predictor of its final estimate?
— Robert Hutton Squire (@RobDotHutton) April 25, 2013
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