UK Economy Jumps by 1% in Third Quarter

The UK economy has had a shock rise in the third quarter of this year, with the Office for National Statistics (ONS) reporting a 1% rise in GDP for the start of July to the end of September. Although many had predicted growth in this quarter, most estimates put it at around 0.6%, so the reported jump by an entire percentage point is very welcome news.

The growth is almost enough to negate the 1.1% contraction that’s been seen from October 2011 until July 2012, which is great news. It’s worth pointing out, however, that previous figures about GDP from the ONS have been revised again and again in the following months, so this current 1% growth could go down (or even up) as the information becomes clearer.

It’s good news for the government, who have been struggling to make people believe that they have a credible plan for the economy, especially with more and more businesses leaders urging them to increase public spending, rather than slashing it as they continue to do. This may stop calls for a state-run business bank too, which many businesses have asked for so that the money from QE can be directly given to them to promote growth, rather than relying on the banks to take the cash and use it to hand out loans.

Unfortunately, the economic situation in Europe seems to be worsening, which will likely have a knock on effect in the UK as exports continue to decline and foreign spending by France and Germany drops.

For this, as well as other reasons, some people are already making sure people see the cloud attached to the silver lining. Capital Economics’ chief UK economist, Vicky Redwood, reminded people that “it won’t be plain sailing from now on […] There are still a number of constraints on the recovery. And as the Olympic effects unwind, it is still possible that the economy contracts again in the fourth quarter,” a feeling echoed by the Prime Minister, who reminded people that there is still “a long road to travel.”

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