The UK has narrowly avoided a triple-dip recession, with first estimates showing that economic growth rose by 0.3% for the first quarter of the year.
The return to positive growth has been attributed to stronger performance in the service sector, which grew by 0.6% in the quarter, and transport and communications, which registered growth of 1.4%.
There was also increased output of North Sea oil reserves brought about by the extended spell of cold weather.
There had been concern that the UK was about to register two consecutive quarters of negative growth, which would have taken the economy into recession for the third time in five years.
Instead, the Office of National Statistics found that GDP had risen by 0.6% against the first quarter of 2011.
"Nothing to Celebrate"
Chancellor George Osborne described the growth figure as “encouraging”, saying that the economy was “healing”.
“Despite a tough economic backdrop, we are making progress. The deficit is down by a third, businesses have created over a million and a quarter new jobs, and interest rates are at record lows,” he said.
“By continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future.”
But opposition ministers called for the figures to be viewed in context, with the UK registering only two quarters of positive growth in the last six.
“We’re in danger of celebrating 0.3%,” said Labour MP and Treasury Select Committee member John Mann. “That’s the perspective we need to have.
“We are falling behind and we need some major shift in policy to turn that around,” he said.
The return to growth follows the decision by credit ratings agency, Fitch, to downgrade the UK from its top rating of AAA to AA+ last week. Fitch had cited poor growth forecasts as the reason behind its decision (read more).
The Chancellor will face further inquisition on his austerity programme next month when the International Monetary Fund visits to assess the UK’s future growth prospects.
Keith McDonald
Which4U Editor
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