As expected, the UK economy has escaped from a triple-dip recession by the skin of its teeth with a return to positive growth of just 0.3% in the first quarter of 2013, according to provisional estimates released by the ONS today. The 0.3% rise comes on the back of negative news regarding the UK’s credit rating, with a downgrading by Fitch to AA+ following a pessimistic assessment of the UK economy by the IMF. The IMF cited the expected impact of the austerity plan combined with weak external demand as the major cause for concern.
The most significant positive contribution to growth was to be found in the service sector, which grew by 0.6%. Production industry output was also up, largely due to growth in mining and quarrying (up 3.2%). As expected, the output from construction industries fell - down by 2.5%. The negative impact of the bad weather on retailing was offset to a great extent by increases in output from the energy suppliers.
News earlier in the week also provided some cheer for the Chancellor as the ONS announced that public sector borrowing fell by £300m during 2012 to £120.6bn. The Chancellor can claim that the austerity plan shows signs of working and that he has delivered on his promise to cut the fiscal deficit in the medium term. To put things in context, today’s positive figures mean that the UK has experienced negative growth for four out of the last six quarters, rather than five!
It is, of course, possible that the figures will be revised downwards, meaning that the economy will be officially in a triple-dip recession - the first on record. However, for now at least, the Chancellor George Osborne can breathe a sigh of relief.