Government celebrates 0.5 per cent growth spurt
Business services and finance help the economy grow in Q1, but observers are less enthusiastic
The UK economy grew by 0.5 per cent in the first quarter of the year, which has been described by the Treasury as 'good news'.
This compares with a contraction of 0.5 per cent at the end of 2010.
Total services output increased by 0.9 per cent in the first quarter compared with a decrease of 0.6 per cent in the previous quarter.
The largest contribution to the growth in the quarter was from business services and finance.
In a statement, chancellor George Osborne, said: “It is good news that the British economy is growing. It is particularly good news that manufacturing is growing so strongly, when we have had such an unbalanced economy in recent years, and manufacturing has not done so well.
“Jobs have been created since the new year and government borrowing is down.”
What others are saying:
Ed Balls, Labour's shadow chancellor: "If George Osborne thinks zero growth over six months is good news and a sign that the recovery is on track, then he is more out of touch and out of his depth than I feared. "
Stephanie Flanders, economics editor, BBC News: “For once, the first estimate for growth in the first quarter is in line with expectations - but it would be hard to argue that it's good news. Not so long ago, many were hoping for a strong bounce back from the slowdown at the end of 2010.
“Instead, the figures suggest that the UK economy has barely grown since the summer - though, of course, that hides a lot of variation.
“Some sectors, such as manufacturing, are doing well, and others are struggling to move ahead.”
Phil Orford, chief executive of the Forum of Private Business: “An increase of 0.5 per cent is as good as we might have hoped for and it’s reassuring to know we haven’t returned to recession. However, it doesn’t indicate any great surge of economic activity, and it won’t dramatically increase confidence in the small business sector. If we want to see some real growth next quarter, we need some radical and immediate measures from the government that will tangibly improve conditions for smaller businesses on the ground.
“If smaller companies are to foster a genuine and meaningful recovery, they need to be freed from costly and time-consuming red tape, benefit from a simpler and more sympathetic tax system, and see the soaring costs of essentials like fuel and utilities tackled. This in turn should help to bring about the second thing we need to see – a significant increase in business and consumer confidence. Of course, the UK economy isn’t performing brilliantly at present, but it could be a lot worse and maintaining confidence is essential if we want to help smaller businesses drive economic recovery.”