Britain’s economy is ‘finally on the mend’, says George Osborne

Britain's beleaguered economy is finally “on the mend”, Chancellor George Osborne said, as official figures showed a second successive quarter of growth

Stefan Rousseau/PA Wire Chancellor George Osborne
Chancellor George Osborne

Britain's beleaguered economy is finally “on the mend”, Chancellor George Osborne said, as official figures showed a second successive quarter of growth.

All four main sectors showed improvement – the first time Britain has been firing on all cylinders for nearly three years, according to the Office for National Statistics.

The estimate of a 0.6% rise in GDP was the first time since 2011 that the UK has seen back-to-back quarterly growth, and doubled the 0.3% figure for the last period.

It was in line with expectations, but the fact that the struggling construction and manufacturing sectors managed to swing into expansion were seen as particularly encouraging as it suggested a broad-based improvement.

The Chancellor hailed the figures as a vindication of the Coalition’s austerity policies, tweeting: “Britain’s holding its nerve, we’re sticking to our plan, the economy’s on the mend. But still a long way to go.”

Some economists doubt that the level of growth can be sustained in the second half of the year given that wages are still failing to keep pace with inflation.

While growth is seen as likely to continue, they suggest it could slip back to around 0.4% for each quarter. Forecasts for the full year are around the 1% mark, with an accelerating rate in 2014.

The 0.6% rise in GDP for the second quarter of 2013 saw services, production, construction and agriculture all up together for the first time since the third quarter of 2010.

The most significant contribution again came from the powerhouse services sector, which represents three-quarters of the economy. It grew 0.6%. Manufacturing also saw a turnaround, picking up 0.4% after a 0.2% fall last time.

But manufacturing remains 10.2% off 2008 pre-crisis levels, with construction still 16.5% down. Overall GDP was 3.3% below its peak.

James Ramsbotham, chief executive of the North East Chamber of Commerce said: “It is encouraging to see growth accelerating and today’s estimates will provide a welcome boost to business optimism across the UK.

“The North East has seen slow-but-steady growth across the private sector for the past 12 months. This is not yet the level of growth we would hope for and there remain major issues to be addressed, such as skills, but it reflects our view that business performance in the North East is now at its strongest level since 2008.”

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