UK economy returns to growth

Gross domestic product grew in the January-March period, after falling by 0,3 percent in the final three months of 2012, the Office for National Statistics said in a statement yesterday.

That still left the economy essentially flat over the past six months, but it did avoid entering recession — which is defined as two quarters running of shrinking economic activity. The unchanged reading was in line with market expectations.

“UK gross domestic product in volume terms was estimated to have increased by 0,3 percent between the fourth quarter of 2012 and the first quarter of 2013, unrevised from the previous publication,” the ONS said.

The economy grew 0,6 percent in the January-March period compared with the first quarter of 2012. That was also unchanged from the previous estimate and in line with forecasts.

Output was boosted by a strong services sector, which grew by 0,6 percent in the first quarter, despite heavy snow across Britain.
The services sector, which makes up about three-quarters of the economy, has now grown every quarter since the end of 2009. The ONS added that “there was little evidence of the bad weather having a significant effect on the services industry” during the first three months of this year.

Added to the mix, strong oil and gas production from the North Sea also helped the economy to avoid a potential triple-dip recession. However, the data was published one day after the International Monetary Fund  declared that Britain was “a long way” from a sustainable economic recovery.

In a gloomy report, the IMF also called for the government to boost infrastructure spending in order to accelerate economic growth and offset state austerity.
The IMF repeated its call for British finance minister George Osborne to ease the coalition government’s austerity drive, despite his insistence last week that he would stick by his deficit-slashing measures.

“The key risk is that persistent slow growth could permanently damage medium-term growth prospects,” the IMF said.
“After five years of relatively weak activity, additional measures are needed to raise long-term expectations of potential growth, while rebalancing necessitates a transformation to a high-investment and more export-oriented economy,” it added. — AFP.