UK escapes triple-dip recession, returns to growth in first quarter

The UK economy avoided a triple-dip recession as the GDP grew at a faster-than-expected 0.3 per cent rate in the first quarter of 2013, powered by its service sector. The Office for National Statistics (ONS) said today that Britain's gross domestic product rose 0.3 per cent in the first quarter of 2013, more than the 0.1 per cent increase forecast by experts. The growth in GDP would mean the economy avoided two consecutive quarters of contraction. There had been fears the UK would enter recession for the third time in five years, a so-called triple-dip recession. "Today's figures are an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress. The deficit is down by a third, businesses have created over a million and a quarter new jobs, and interest rates are at record lows," Chancellor George Osborne said. The growth, which is seen as a minor victory for Osborne and his tough austerity measures, was powered by a relatively robust performance from the UK's services sector that expanded by 0.6 per cent on the previous quarter. "We all know there are no easy answers to problems built up over many years, and I can't promise the road ahead will always be smooth, but by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future," the Chancellor said. However, business secretary Vince Cable sounded a note of caution amid the general feeling of relief. "Today's figures are modestly encouraging and taken alongside other indicators such as employment figures, suggest that things are going in the right direction. "However, there is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports. These issues all need to be addressed before people feel like the economy is genuinely starting to recover," Mr Cable said. John Mann, a Labour MP on the House of Commons Treasury Committee, warned that the figures in fact indicate "the Japanisation of the British economy". "In Japan, their economy stagnated - sometimes it went down to below zero, sometimes just above it, but it kept on this very low-growth trend and kept there for 15 years and it's been a disaster for Japan. We are in the same cycle and breaking out of it will need a change of policy," he said. Last week, the credit rating agency Fitch became the second agency to strip Britain of its AAA rating. It cited the UK's weak growth prospects and rising debt as the reasons behind the rating action. The International Monetary Fund also recommended last week that the Chancellor slow his programme of cuts. Despite the growth in the last quarter, the ONS figures showed that the level of UK GDP remains 2.6 per cent below its peak in the first quarter of 2008, while other economies such as Germany and the US have recovered their lost ground.

UK escapes triple-dip recession, returns to growth in first quarter

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