POLITICS

GDP Figures Show UK Economy Dodges Triple-Dip Recession With 0.3% Growth

25/04/2013 09:31 BST | Updated 25/04/2013 17:20 BST

The UK economy grew by 0.3% in the first quarter of 2013, narrowly avoiding an unprecedented trip-dip recession.

The GDP figures published on Thursday morning will come as a huge relief for George Osborne, who faced the prospect of having to explain why Britain had been plunged into recession for the third time since 2008.

In the final quarter of 2012 the UK economy shrank by 0.3%. Presiding over a triple-dip would have been a political nightmare for the chancellor who has faced a barrage of criticism from both the left and right over his stewardship of the faltering economy.

"Today's figures are an encouraging sign the economy is healing. Despite a tough economic backdrop, we are making progress," Osborne said.

The difference between slight growth or a slight shrinking of the economy arguably does not make that much difference economically, however politically it will be a boost for the chancellor's personal standing as well as the coalition as a whole.

Nick Clegg told LBC 97.3 radio: "We haven't triple-dipped, so that's obviously a welcome thing, but I don't want anyone to think that somehow we are out of the woods yet.

"We have still got a lot of work to do. The healing of the British economy is taking longer than we had anticipated and we will continue to work hard to make sure the country and the economy grow from strength to strength."

And business secretary Vince Cable described the figures as Today's figures as "modestly encouraging".

“However there is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports, which I am doing now on my visit to Brazil," he said.

Osborne's critics are unlikely to be impressed by a growth rate of just 0.3%. Shadow chancellor Ed Balls said David Cameron and Osborne were responsible for slowest recovery for over 100 years.

"These lacklustre figures show our economy is only just back to where it was six months ago and continue the picture of flatlining we have seen since the last spending review," he said.

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“The longer we continue to bump along the bottom the more long term damage will be done. Britain’s struggling families and businesses cannot afford another two years of this."

Today's figures follow a brutal assessment of Britain's economic prospects by incoming Bank of England governor Mark Carney, who branded the UK a "crisis economy" alongside stricken eurozone countries and Japan.

International Monetary Fund (IMF) chief Christine Lagarde also cautioned that UK growth numbers were "not particularly good", just days after the IMF slashed UK growth forecasts from 1% to 0.7% for 2013 and 2014's projection from 1.9% to 1.5% as it said the private sector was being hampered by a lack of credit and economic uncertainty.

Osborne was offered some respite earlier this week when figures revealed underlying public borrowing fell in the last financial year to £120.6 billion - but it was just £300 million lower than a year earlier in the latest sign that his austerity plans are stalling.

And yesterday a survey showed that almost half the British public expect to be worse off by the time of the next election in 2015.

Gavin Kelly, chief executive of the Resolution Foundation think-tank, said there was a "gloomy mood" among large parts of the electorate and it did not matter what today's GDP figures showed as people will see the economy as stagnant.

"Many people are down-beat about how long it will take the economy to fully recover," he said. "How this pessimism plays out in terms of party support will play a key role in determining the next election."