Yesterday (25 October 2012), the UK came out of recession after 3 quarters of negative growth. The economy grew by 1% in Q3, which is above the estimate by economists of 0.6%. This is the largest rise in GDP for 5 years which shows the conservatives must be doing something right, with Mr Cameron stating that “We are on the right track”.
I expected the UK to come out of a recession due to the London 2012 Olympic and Paralympic games. However, this only accounted for 0.2% of the total 1% growth figure. What equated the other 0.8%? Well, the service sector grew by 1.3% and considering it declined by 0.1% in Q2, that is impressive. Too add, this is just a preliminary estimate made by the Office for National Statistics and the revised figure may be higher or lower.
This is obviously welcome news for us Britons, but the growth figure has to be put into some context. The negative growth in Q2 was enhanced by bad weather and an extra bank holiday for the Queen’s Diamond Jubilee celebrations. That, along with the Olympics, boosted the figure, and perhaps paints a better picture than what is actually happening with the UK economy. Furthermore, the output in Q3 of 2011 is almost exactly the same as it is Q3 of this year, clearly showing how the economy is stagnating.
It is good news that this most recent quarter has had a better than expected growth figure, but the economy still has a long way to go to reaching a ‘boom’.
I am still not convinced by the contractionary fiscal policy the Tories are adopting but I am a little more optimistic about the future of our economy.