UK Moves Out of Recession After Olympics Boost
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The UK has posted its strongest quarterly growth in five years, recovering from a recession in the third quarter thanks to the London Olympics spending boost.
The UK emerged from its longest double-dip recession since the World War II after the economy grew 1 percent between the second and third quarters, beating forecasts for a 0.6 percent gain, after shrinking by 0.4 percent between April and June.
The unexpected return to growth came as a relief for the coalition government who has come under fire for its austerity programme.
The UK has posted its strongest quarterly growth in five years, recovering from a recession in the third quarter thanks to the London Olympics spending boost.
The UK emerged from its longest double-dip recession since the World War II after the economy grew 1 percent between the second and third quarters, beating forecasts for a 0.6 percent gain, after shrinking by 0.4 percent between April and June.
The unexpected return to growth came as a relief for the coalition government who has come under fire for its austerity programme.
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The economy had been in recession for the previous nine months and has still not recovered the levels of output seen before the financial crisis in 2008. Economists define a recession as at least two quarters of economic contraction.
The Office for National Statistics said the economy received a one-off boost from the London Olympics, with ticket sales adding 0.2 percentage points to the overall GDP figures.
However, the ONS said that beyond the effect of ticket sales it was hard to put an exact figure on the Olympic effect, although it cited increased hotel and restaurant activity in London as well as strength from employment agencies.
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Despite the return to growth, economists told the Wall Street Journal that a sustained recovery is far from assured, noting that sectors such as construction and energy remain very weak. The forecast growth for 2012 is flat and expected to be modest next year.
Acknowledging that there were still challenges ahead due to weakness in the eurozone, Treasury Chief George Osborne said in a statement:
[quote] There is still a long way to go, but these figures show we are on the right track. This another sign that the economy is healing and we have the right approach: we’ve cut the deficit by a quarter, over a million new jobs have been created in the private sector, inflation is down, and the economy is growing. [/quote]
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