No triple dip, but UK economy ‘not out of the woods’

The largest contribution to GDP growth was the service sector, which contributed growth of 0.47 per cent. Production, which was weak in the last quarter of 2012, grew by 0.03 per cent.

The Office for National Statistics said the construction industries had offset growth from production and services – falling by 2.5 per cent – reducing GDP growth by 0.17 percentage points.

Thursday’s GDP figures are estimates, and the ONS warned that revisions to the figures are typical – usually by around 01. to 02. per cent.

Slow growth

But Jonathan Portes, director of the National Institute of Economic and Social Research, told Channel 4 News that avoiding a recession does not mean the UK economy is out of the woods.

“These are moderately encouraging figures, but it doesn’t change the underlying picture,” he said. “The question of whether or not we would be in a triple dip recession was always irrelevant. The picture of very slow growth continues.”

He added that most of the growth has come from the service sector, and within that from hotels and catering sector. “That is not exactly the investment led recovery we were hoping for,” he said.

Rollercoaster

The figures are the latest in a rollercoaster ride for the economy. In the second quarter of 2012 the economy fell by 0.4 per cent, but then grew by 0.9 per cent.

Snowfall and the cold weather are believed to have hit retail sales in the first three months of the year, the Office for National Statistics said. However, that was moderated increased demand for electricity and gas.

Fears had emerged that the UK was about to enter an unprecedented triple dip recession, after the UK economy contracted by 0.3 per cent in the last quarter of 2012.

That downturn as caused by a combination of factors including the Eurozone financial crisis, and poor output from the UK’s production and service industries.