One-off factors have affected the figure, the ONS has said
UK Bus Awards presenter Stephanie Flanders has said UK economy growth figures out last week, were far below ideal but not disappointing due to low expectations.
Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics (ONS), and grew by 0.5% in the previous three months, but contracted by 0.5% in the last three months of 2010. Growth in the UK economy slowed in the three months to June 30, partly because of the extra bank holiday in April.
The ONS said growth had also been slowed by some other one-off factors, including the effects of the Japanese earthquake and tsunami.
“The positive news is that the British economy is continuing to grow and is creating jobs,” said chancellor George Osborne. “And it is positive news too that at a time of real international instability we are a safe haven in the storm.”
Other commentators have said the slowing growth is a serious problem for the government and it should take steps to boost growth. “The UK economy might as well still be in recession, even if technically it isn’t,” said Nick Pearce, director of the Institute for Public Policy Research (IPPR). “Outside of London, in particular, the recession continues to be felt.” Shadow chancellor Ed Balls has called on the government to reverse the increase in VAT that took effect at the beginning of the year.
Flanders, economics editor for the BBC said: “Today’s GDP number would be disappointing if expectations had not already been set so low. It is far below what we might have hoped for and significantly below the growth expected this year from most of our main trading partners. On average, the latest independent forecasts have the UK growing by 1.3% in 2011, significantly below the official OBR forecast of 1.7%. That compares with a consensus forecast of 2.5% for the US, 3.4% for Germany and 2% for France.” They were: the additional bank holiday for the royal wedding, the wedding itself, the after-effects of the Japanese earthquake and tsunami, the first phase of Olympic ticket sales and the record warm weather in April.
Analysts said that the ONS statement that GDP would have grown by 0.7% without one-off factors is good news.
“Given the comments from the ONS, this is a better-than-hoped for report, but with confidence remaining weak and household finances under major pressure the underlying trend remains subdued,” said James Knightley at ING Financial Markets. “Nonetheless, with firms still looking to hire and invest… we remain hopeful of a gradual acceleration in GDP growth over the next 12 months.”
For more information visit the ONS’s website at www.statistics.gov.uk