UK avoids triple-dip recession with 0.3pc growth
Despite this growth GDP still remains 2.6% below its pre-recession peak in the first quarter of 2008, the quarter before the start of the 2008 and 2009 recession.
Vicky Redwood, chief UK economist, said: “By posting a better than expected 0.3% quarterly expansion in the first quarter the UK has comfortably avoided a triple-dip recession.
“The rise in GDP will be a big relief for Mr Osborne. And although the debate about whether the UK was in a triple-dip had been fairly meaningless from an economic point of view the rise was better than the 0.1% increase expected by the consensus.”
The service sector was the main driving force growing by 0.6% and contributing almost 0.5% to GDP.
This was partly offset by construction which contracted by 2.5% and had a negative contribution of 0.2 percentage points to overall GDP growth.
Production made only a slight contribution of 0.03 percentage points, growing by 0.2% in the first quarter 2013.
Redwood said that the figures may be revised further but the rise is positive.
She said: “The figure may yet be revised. But it could just as easily be revised up further as revised down. Of course in any normal recovery a 0.3% expansion would be considered quite feeble. Indeed it is an indication of how bad things are that a 0.3% rise in GDP which did no more than reverse a similar-sized contraction in the previous quarter – is considered good news.”
Phil Orford, chief executive at the Forum, a business support organisation focused on the growth and profitability of small businesses, said: “We have to look at these figures positively; the facts are that the economy is now making progress. The spectre of a triple dip recession is receding and with the announcement on Funding for Lending yesterday this is probably the most positive week for small business for quite some time.
“If these figures can help convince both consumers and businesses that the UK has turned a corner, it paves the way for confidence to return and be a springboard for accelerated growth. This is the hope.”