UK GDP – quarterly growth of 1%

The UK economy experienced a rise in GDP in the third quarter of 2012, according to provisional estimates released by the ONS today. The increase of 1%, which follows positive news on inflation and jobs, puts the break on what was the longest and deepest double-dip recession since official records began over 50 years ago. While these figures are subject to official revision, it is unlikely that they will be revised downwards – indeed the real picture may be even better than those published today. Positive contributions came from services (up 1.3%) and production (up 1.1%). As expected, construction activity continued to fall (down 2.5%).

The government is, of course, playing down the return to positive growth, firstly because the technical definition of economic growth refers to two consecutive quarters, and secondly, because no politician wants to be associated with claiming we are witnessing the ‘green shoots’ of recovery. The government will also be aware of figures also released this week showing just how much incomes have been squeezed in the current recession. In fact, Net National Income per head (NNI) was 13.2% below its pre-recession level in the first quarter of 2008. It will take a much more sustained period of recovery to return income per head to its pre-recession levels.