According to respected forecaster NIESR, the UK has pulled itself out of the double-dip recession by posting a rapid growth figure of 0.8%.
The report published yesterday by the National institute of Economic and Social Research shows that the UK economy grew at its fastest pace in five years in the last quarter and cites the Olympic Games as one of the key reasons for the nation’s successful extraction from recession. In the quarter ending in September the economy grew by 0.8%.
“Unless output turns down again, the recession is over,” NIESR said. However, the think tank cautioned that the underlying rate of growth was weaker, at close to 0.2% or 0.3%. NIESR claims that the figure was bolstered by the impact of early ticket sales for the Games and the one off hit of extra spending thanks to the Queens Jubilee.
Despite the stronger than expected growth figures the NIESR has cautioned that the nation’s period of depression is set to continue for some time amid slower growth in future quarters.
“We do not expect output to pass its peak, in early 2008, until 2014,” it said. “The strength of the figure for the three months to September is largely an artefact of special events.”
The NIESR report will be a welcome relief to the government and businesses following the International monetary fund sharply downgrading its forecasts for the UK economy over the whole of 2012. They said that the expected growth level of 0.2% would in fact contract by -0.4% but would see growth of 1.1% next year. The UK has been battered by disappointing economic data over the last few weeks.
Alan Clarke, an economist at Scotiabank, said the problems in the Eurozone, the UK’s main trading partner, mean “there is precious little reason why our exports should be flying out of ports” ,But he added: “If the UK is going to recover in a meaningful way over the coming year, it is going to rely to some extent on firmer demand from abroad. We have our doubts.”
The official growth figure for the last quarter will be released by the Office for National Statistics on October 25. It will be interesting to see if their figures match the NIESR ones. There has been continuing debate over the contradictory figures being released by the various agencies with investors arguing that the often mixed data makes it incredibly difficult to get an accurate picture on the health of the economy.
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