UK storms out of double-dip recession
London, October 26, 2012
Britain stormed out of its longest double-dip recession since the 1950s after its economy returned to growth in the third quarter with a robust gain of one per cent, said its official data.
British gross domestic product, or combined value of produced goods and services, grew at the strongest rate for five years during the July-September period after contracting in the previous three quarters.
Market expectations had been for the economy of Britain, which is not part of the euro zone, to have expanded by 0.6pc in the third quarter compared with the second after falling into a double-dip recession in late 2011.
British Prime Minister David Cameron welcomed the data but warned against complacency amid global economic headwinds.
"There is still much to do, but these GDP figures show we are on the right track, and our economy is healing," Cameron said in a statement.
Finance minister George Osborne echoed the cautious sentiment, saying that "yesterday's weak data from the euro zone were a reminder that we still face many economic challenges at home and abroad."
Britain escaped from a deep downturn in late 2009 but fell back into recession at the end of 2011. The economy contracted by 0.4pc in the second quarter of this year after shrinking by 0.3pc in the first - and by 0.4pc in the final quarter of 2011.
"GDP was estimated to have increased by 1pc in Q3 2012 compared with Q2 2012," the Office for National Statistics (ONS) said in a statement.
"The largest contribution to the increase came from the services sector. There was also an increase in activity in the production sector. Activity in the construction sector fell."
Growth was also affected by one-off factors, including the London 2012 Olympic Games and rebounding activity after an extra public holiday for Queen Elizabeth II's Diamond Jubilee, the ONS said.
"Not only did the UK pull out of its double-dip in Q3, but the 1pc quarterly rise in GDP was a fair bit better than expected," said Vicky Redwood, senior economist at the Capital Economics research group.
"Admittedly, much of this reflected temporary factors. We think that the reversal of the Jubilee effect probably added about 0.5pc, the Olympic ticket sales added 0.2pc and there may have been a wider Olympic boost.
"But even accounting for this suggests that underlying output managed to rise by a small amount - an improvement on recent quarters. It won't be plain sailing from now on, though. There are still a number of constraints on the recovery."
Output was meanwhile flat in the third quarter compared with the equivalent period in 2011, the ONS added.
Despite emerging from recession, Britain was facing considerable difficulties, not least from tight credit conditions and worries about the impact of the debt crisis in the euro zone, a key trading partner. Other major headwinds include rising inflation on higher energy and food prices, an uncertain jobs market and ongoing austerity measures from Britain's coalition government.
More INTERNATIONAL NEWS Stories
- Investors monitoring Pimco after internal strife
- N Korea tanker ‘leaves Libya rebel port carrying oil’
- Malaysia plane incident not terror related: Interpol
- Crimea closes air space to commercial flights
- Missing Malaysian plane last seen At Malacca Strait
- Stolen passport holder on missing plane is Iranian
- China deploys 10 satellites to search for Malaysia jet
- Libya says halts tanker outside port; rebels deny it
- Libya orders military force to 'liberate' ports
- Big bananas: Chiquita, Fyffes merge
- Radar sweeps, dozens of aircraft, but no sign of plane
- N Korea tanker loads oil at Libya rebel port
- Gold drops as US growth optimism weighs
- Merkel raps Putin; Russia tightens grip on Crimea
- World 'at sea' over missing Malaysian jetliner
- Passports requiring probe were on Malaysia flight
- 40 killed in Yemen as Houthi fighters near capital
- Vietnam finds object in sea; search on
- $5bn poll spend to boost India economy
- Libya authorises use of force against Korean tanker
- Ukraine PM says he will go to US to discuss crisis
- Syrian journalist killed covering fighting
- Malaysian jet may have turned back before vanishing
- No sign of missing plane; Malaysia probes false passports
- Two Europeans not on board 'missing' Malaysian jet
- China draws red line on North Korea
- Saudi sentences three to death for 2003 bombing
- First bitcoin machine opens in UK
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects