The provisional UK economic growth figure for the third quarter of 0.8% was in line with market expectations, but no less welcome for that. As the graph above shows, the UK economy has made a stuttering recovery from the financial crisis, but now appears to be gaining some momentum. Year-on-year growth is now running at 1.5%, despite the difficult post-Olympic chilly final quarter to 2012. Ironically the warm summer may have held back growth a little – chief economist at Office for National Statistics, said quarterly growth could have been 0.1% higher, but for larger than normal fall in gas and electricity output.
2013’s three successive quarters of growth have still not been enough to bring the UK economy back to the peak it achieved in the first quarter of 2008. That will take another 2.5% of growth, implying that the 2008 meltdown may have ‘lost’ the UK over six years of economic growth.
All four sectors of the economy – agriculture, production, construction and services – recorded a second consecutive quarter of growth, with the strongest performance from construction, 2012’s laggard. The overall performance once again raises questions about the Bank of England’s ‘forward guidance’ that implied base rates on hold until at least mid-2016. However, if rates do rise earlier because of the impact of stronger growth on unemployment levels, it would be hard to complain.