December 22 2014 Latest news:
Tuesday, January 28, 2014
The UK economy grew by 0.7% during the fourth quarter of 2013 and by 1.9% over the year − its best annual performance since 2007, the Office for National Statistics said today.
The fourth quarter figure of 0.7% represents a slgiht slowing in pace of expansion, with overall growth being held back by a poor performance by the construction sector in November.
But the figures suggested that the UK has now recovered the lion’s share of gross domestic product (GDP) lost during the recession.
Joe Grice, chief economic adviser at the Office for National Statistics (ONS), said: “We have now seen four successive quarters of significant growth and the economy does seem to be improving more consistently.
“Today’s estimate suggests over four-fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3% below the pre-recession peak.”
In 2007, the last year when the pace of growth was faster, the economy grew by 3.4%. In 2012, growth was just 0.3%.
Today’s figures show the scale of improvements in the economy’s prospects, a year after it was feared that the country was about to sink into an unprecedented “triple-dip” recession.
They provide the latest boost for Chancellor George Osborne after the International Monetary Fund recently upgraded its forecast for growth in Britain - just months after the body told the Government it should rethink its austerity strategy.
But the surprise pace of growth in 2013 saw the economy grow by 0.5% in the first quarter and 0.8% in the second and third three-month periods of the year.
Growth during the final quarter included a 0.9% rise in manufacturing and a 0.8% increase in the services sector, although construction shrank by 0.3%, largely due to a 4% slump in November.
Construction remains 11.2% off its pre-recession level in the first quarter of 2008 while manufacturing is still 8.2% below its peak. The service sector, however, is now above 2008 levels.
Prime Minister David Cameron tweeted: “The GDP figures are another sign our long-term economic plan is working - more growth means more jobs, security and opportunities for people.”
And Chancellor George Osborne said: “These numbers are a boost for the economic security of hard-working people. Growth is broadly based, with manufacturing growing fastest of all.
“It is more evidence that our long-term economic plan is working. But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that’s delivering jobs and a brighter economic future.”
Deputy Prime Minister Nick Clegg said the task of repairing the country’s finances must be completed “fairly”.
He said: “Our economy is moving in the right direction - unemployment is down and growth is up. The coalition Government has set Britain on the right course by repairing the country’s finances and helping to create over 1.6million jobs in the private sector.
“But we must finish the job fairly, with further investment in jobs outside London and by cutting taxes for working people.”
Andy Wood, chairman of New Anglia Local Enterprise Partnership, said: “The continued improvements in the GDP figures are good news for business and do show that business is leading the UK and regional economy out of the downturn.
“In Norfolk and Suffolk we are seeing hard working and enterprising firms feeling more optimistic in 2014. Investment in infrastructure projects such as the A11 and superfast broadband are starting to make a real difference and we look forward the economy growing more and more over the coming months.”
John Dugmore, chief executive of Suffolk Chamber of Commerce, added: “These are encouraging statistics and show that the hard work and entrepreneurial spirit of firms across Suffolk and the UK are making a sustained difference.
“We have heard recently from Newmarket, the home of horse racing based in our county of the £208 million contribution they make to the local economy and how going forward they are excited about opportunities in 2014. They are an example that shows business is committed to playing it part in leading the UK economy through the recovery.”
Martin Beck, UK economist at Capital Economics, said the 0.7% rise in the fourth quarter was “a touch disappointing” given the recent strength of recent business surveys but the 1.9% annual rate of growth could still prove to be the strongest for any of the G7 nations.
“Of course, output remains below its pre-crisis peak (by 1.3%). And, in levels terms, the UK’s economy’s performance remains pretty insipid compared with other major economies. Meanwhile, Q4’s number was below the 0.9% expected by the MPC, although this may help to quell murmurs of some support among Committee members for an interest rate rise sooner rather than later.
“But Q4’s number provides a good launch pad for a further acceleration in growth this year. With rising real incomes set to provide stronger support for household spending and investment set to pick up, we expect GDP to expand by a healthy 3% in 2014,” he added.