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UK crawls out of recession as GDP up 1%

by William Robins on Oct 25, 2012 at 09:35

UK crawls out of recession as GDP up 1%

The UK is out of a double dip recession after GDP was estimated to have increased by 1% in the third quarter of 2012.

The Office for National Statistics' (ONS) first estimate showed growth of 1% in the third quarter of 2012.

The ONS said output of the production industries was estimated to have increased by 1.1% from the second to third quarter following a decrease of 0.7% between the first and second.

However construction sector output has fallen an estimated 2.5% to the third quarter, following a decrease of 3% from first to second.

Service industry output has increased an estimated 1.3% in the third quarter following a decrease of 1% from the first to second.

GDP in volume terms was estimated to have been flat in the third quarter of 2012, when compared with the third quarter of 2011.

ONS said the Olympics and Paralympics had affected the third quarter figures. It said the sporting events, held from 27 July to 9 September had impacted a range of areas including sports activities, employment, arts and entertainment, accommodation and transport.

It said ticket sales alone increased GDP in the third quarter by about 0.2%. However the ONS said it was not possible to quantify the overall impact of the Olympics and some positive effects may have displaced other activities.

Prime minister David Cameron (pictured) has been accused of leaking the news that Britain is out of a recession by telling the House of Commons yesterday ‘the good news will keep on coming’.

Labour said the comment was a 'clear reference' to the official GDP figure. Cameron is one of a handful of people given access to market-sensitive information such as GDP figures ahead of their publication.

24 comments so far. Why not have your say?

GM

Oct 25, 2012 at 09:42

Labour are just cheesed off their mantra about no growth and double dip recession has run out of steam - new soundbite required

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Geoff Downs

Oct 25, 2012 at 09:48

The economic problems are only just beginning.

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Bob Donaldson

Oct 25, 2012 at 10:01

@Geoff Downs - I often judge the economy through my clients eyes which are various occupations and companies. Down here in S Wales it may not be brilliant but many are holding their own and yes they are squeezing unecessary costs out of the system and having to look at costs they pass on to their customers. They are all still in work and making profit so it is not all doom and gloom.

Radical change is taking place not just because of the economy but because of the internet and the way we do business. Pubs are closing because there are too many and the high street rents are exorbitant and too large a fixed cost for many to make a profit.

Change is needed and we will get through it of that I am sure

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Geoff Downs

Oct 25, 2012 at 10:09

Bob,

I don't disagree with some of that. The problem though is debt, public and private. The Government has no real strategy to deal with that. To use a popular phrase, the can is being kicked down the road.

To me there are deep storm clouds ahead.

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Derrick Coade

Oct 25, 2012 at 10:10

@Bob Donaldson

I never normally comment but do read the blogs avidly. Bob as usual your thoughts are as usual full of common sense. I concur fully with them and I only wish Geoff would see the glass is half full not half empty

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Geoff Downs

Oct 25, 2012 at 10:19

Derrick,

You may be right, but it would be good if you could explain what you mean.

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Anitaki

Oct 25, 2012 at 10:20

The UK economy will only change when inept staff who work in Local Authority offices all around the country lose their job security.

There is a case going on now where it has taken two years to get "no parking" signs replaced here, and within days, it was discovered that they are 2 metres too far apart to be enforced. So, another waste of public money is discussed in various committees who all claim travelling expenses and all agree there is no money for (more) new signage. That is indicative of what goes on whilst we struggle to pay for these people.

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PensionMan

Oct 25, 2012 at 10:21

At last some good news.

Labour will no doubt come up with some critcism - thats what they do.

Overall I think the Government are on the right track.

Its not perfect and its not easy but I strongly believe that if Labour were still in power we would be in a much, much worse place.

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Geoff Downs

Oct 25, 2012 at 10:29

PensionMan

I'm not interested in the political aspect of this, most of the parties are pretty similar.

This an economic problem that neither party knows how to deal with.

On the right track, in what way?

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Dan Rear

Oct 25, 2012 at 10:38

I concur with the 'Glass Half Empty' theory I'm afraid. The UK, and indeed the Western world, is mired in too much debt, bad demographics, a spineless Political class, and too much caring all round.

We need to get tough, tell people they've had things too easy for too long, and prepare for a gradual run down of living standards for the majority. This process will take another generation, ie 20+ years, to work through the system.

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Simon Mansell

Oct 25, 2012 at 11:24

In the land of the blind the one eyed man is King. In the continent of Europe, the land of the lame, the man who craws is the athlete! This is good news but not good enough!

The economy of China grows every quarter the equivalent of the Greek debt! The Chinese want what we have got and soon they will be competing for it and I’m afraid we will wake up to the fact that our welfare system is built on wealth and not altruism. Without dynamism and honesty we will end up waiting on the tables of the emerging BRIC economies. We are the emerging third world!

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PensionMan

Oct 25, 2012 at 12:00

@ Geoff Downs

How are the parties pretty similar? One wants to spend more and one wants to make more savings.

On the right track - we have gone from being in a recession to technically not being in a recession.

Its positive news - albeit it could be an awful lot better.

Time will tell though!

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Geoff Downs

Oct 25, 2012 at 12:14

PensionMan,

Your first sentence is interesting. Simply spending more,like the US, is crazy.

Austerity though also has it's limitations.

There will have to be new ideas. Our economy is consumer led, dependent on bank lending and consumer borrowing. Neither are happening because the consumer is already in debt and the banks are now more choosy who they loan to.

We have a real problem and the old arguments of tax and spend or cuts don't look to be solutions by themselves.

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Barman

Oct 25, 2012 at 13:11

So if we have an Olympic Games every 3 months we'll be fine!

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JNP

Oct 25, 2012 at 13:22

Simon, "we are the emerging third world" - brilliant! Good wit. Shame that it is basically true, although if the Chinese or others are waiting for our debts to be repaid, they may have a long wait.

Re GDP, at least it is a bit of positive news. I still feel very uneasy about the fact that the UK Govt is still spending more than it has coming in, thus continuing to increase national debt. Wasn't it Mrs Thatcher who said that being PM was just good house-keeping? That theory seems to have gone out the window, such that when parliament attempts to pass legislation restricting benefits to no more than £26k per household it gets rejected. Insanity. One day we will wake up and realise that we cannot afford the luxuries that we, an ex-wealthy nation, have become accustomed to.

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Usually found sitting on the fence

Oct 25, 2012 at 14:38

@ JNP - The knack is to get the economy to redistribute the wealth that it creates. This should not be through high taxes and big benefits, it should be through lower profits and better pay (employee benefits). But getting the big profit companies to even pay their current tax liabilities (although arguably they do through creative, but legal, accounting) is hard enough, why would they pay their staff a socially responsible salary (i.e. one that does not need big benefit top ups) is going to be really hard!!

@ PensionMan - My memory is not what it should be, but were we actually in a recession when ConDems took over? Or did we slide back into under their watch? (genuinely sketchy on the timings). It is good news, but it is only 1 quarter and Olympic assisted, so caution advised. Finally, the point about there being little between the two main parties is quite valid. The main difference is one says they will spend their way out, the other says we need to cut our way out, but spends anyway!!

The system is only broken because of greed and/or selfish actions of the few. Most people are doing their best to work to survive, those a little more fortunate are putting some aside. It is only the few, and this is at both ends of the wealth spectrum, who are not working and have no intention of working or who are not paying their taxes and doing everything possible to keep it that way.

We need a strong political will and not one that "kicks the can" for their term, but one that goes after the companies, forget them paying taxes, make them pay better wages (not a minimum, a living) and reward them with lower taxes (which they are not paying anyway, so maybe it's flawed)...

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Michael Brown

Oct 25, 2012 at 15:02

Simon

Do not believe what the Chinese state. This is a communist state that says things to keep the population in order. The figs from china are NOT real just what they wish to do.

Bob,

With you 100%. I meet may company directors on a monthly basis. They are working extremely hard but have two problems: The resource from the bank is being removed by them. The nervousness to recruit staff.

And finally one has to realise that the GDP includes GVT spending. As the GVT is not spending, welfare is increasing, investment is decreasing this effects the GDP. The normality of the UK GDP is on average 2.1% per annum. Under Labour this was well above where money just "went out of the door". Now we have to get back to our normal GDP it means that we have to pay back the stupid GDP under the last 10 years of Labour.

The country is generating real jobs that create wealth and not GVT jobs that destroy jobs.

Geoff

Interesting points to which one has to consider.

And finally I personally have gone through more than 3 labour GVTS and each time the mess left behind is bigger than the last labour GVT. One has to pray that they never get in power again. As for Mr Balls one hopes that he has to retire before he gets another chance to ruin

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Geoff Downs

Oct 25, 2012 at 15:25

Michael,

I stick with my view that there is little to separate the political parties.

The UK has many problems. We have to much debt, private and public. We are dependent on financial services and retailing. House prices are still in a bubble. The list could go on and on.

The solution isn't at all clear to me. More spending would be dangerous, but austerity would also be risky. By the way I cannot see yet where this current Government has made cuts, but maybe that will be apparent later.

Getting public spending of all types under control is essential. It's how you do it that's the issue.

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Simon Mansell

Oct 25, 2012 at 15:59

@Michael Brown Oct 25, 2012 at 15:02

I'm not taken in by the UK government either and their equivalent of the communist party, the public sector where membership is rewarded covertly through taxation of the private sector and general population - Actuaries Hymans Robertson, calculate some 26 per cent of council tax receipts now goes towards public sector pensions whilst the Gordon Brown dividend tax credit hit continues to cripple the over taxed and over regulated private sector. It’s time to stop killing the Goose that lays the golden egg and recognise that before your generate heat you need logs on the fire!

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Geoff Downs

Oct 25, 2012 at 16:07

Simon,

I agree with that. This may be an issue that this Government inherited, but are they dealing with it or fudging it?

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Michael Brown

Oct 25, 2012 at 16:08

Geoff

May be a little to you but borrowing more against borrowing less is a major differnce, would you not agree.

I beleive that we need to balance the books, unfortunately the debt left will, like you say take many years as it was and remains so big.

The really big question is what to do about reducing debt. We do not want to be associated with the PIGS? The only saving we have at present is the lack of interest on our debts which does stop us from falling along with the PIGS.

I think that the people, apart from those on the march the other weekend, realise that we have to reduce the debt before we can start to spend again.

Unfortunately the GVT employees only want to fill their own boots as they do not realise who provides the real money to the UK.

Now you have Balls spending the 3Gnmoney saying this will resolve the issue. Unfortunately £3B will not realy make a big hole in the problem.

Simon

Having worked advising Teachers years ago that fact was really appent. Brown gave extra money to the schools and immeadiately increased the Local GVTs contributions to pension funds by more than the monies given to the schools. Therfore the local taxpayer paid for extra schooling costs and not the Brown fiasco.

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Dan Rear

Oct 25, 2012 at 16:19

I posted on here a day or 2 ago, but did you chaps see the Jeff Randall Sky Prog the other night, "Born Bankrupt" or similar? It should be made compulsory viewing for the whole country.

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Usually found sitting on the fence

Oct 25, 2012 at 16:51

Rather than the usual finger pointing between politicians and their supporters, perhaps all political parties should reflect on the damage they leave behind. The Cons make it easy to keep wages low, the Labs borrow to address the problem, the Cons have to cut back to address the Labs overspend, the Labs have to borrow to undo the social poverty of the... And so on.

The trouble is Labour's spending was faulty in that they lost control, circumstances did not help, but they lacked prudent controls. Theoretically schemes such as the scrappage scheme was good for the economy, helped get cars moving and VAT coming back into the Revenue. But then what did the banks bail out achieve (putting to one side the protection of jobs, salaries and peoples savings) for the UK economy? But then, under the circumstances the other 2 parties would have done the exact same thing!!

So, has the current Govt hit their promised targets? Is borrowing at the levels promised based on the cuts made? Are we in any better shape than prior Govt? But had Labout remained would it have been that much different?

Which comes back to Geoff's point, neither party is significantly better than the other, each one does something the other feels is their mission to undo, to rectify and then the other has to fix it again and round and round they go, all the time feathering their own nests, protecting their own lifestyles and sysematically making it harder and harder for the vast many in the middle (It's a large middle with reasonably small ends)

@ Michael Brown - Most of us appreciate the need for cuts, the need to reduce the state dependency and to get the UK economy more balanced. It's the speed of the cuts and their consequences, intended or not, that is of concern. The emphasise should be on making the cuts, cutting the cost, cutting the number of those in beaureaucratic positions, reducing red tape and getting the private sector to pay responsible wages to keep benefits needs down. It has to be a measured and cautious progression, rushing and cutting without care could be far more damaging than most of us anticipate.

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John Brady

Oct 25, 2012 at 20:56

As a Government it all depends on your priorities and who you are trying to represent.

Tory Governments will always make cuts that will result in a section of society being better off and a section of society being forgotten and left in deprivation. This will lead to crime, poverty, poor health and poor education for a certain amount of society and our major cities becoming run down.

The other side of the cake is that Labour will always have to spend to make up for years or Tory cuts.

It's all pretty pathetic to be honest and if either of them actually tried to run the country instead of slagging each other off and trying to score points off each other we'd all be better off.

I agree with Anitaki, there are too many University Graduate types doing exactly what was described in his/her post, in other words screwing the whole world up by stealing money in wages and pensions every month and doing nothing but causing trouble in every industry and service they are involved in.

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