Olympics help UK economy return to growth

25/10/2012

The UK economy has emerged from recession in the three months from July to September. This statistic was boosted by this summer’s Olympic Games in London.

The economy grew by 1.0%, according to official gross domestic product figures, which measure the value of everything produced in the country.

The Office for National Statistics said that Olympic ticket sales had added 0.2 percentage points to the figures. All ticket sales from both the Olympic and Paralympic Games counted towards July to September’s GDP figure.

The UK economy had been in recession for the previous nine months and has still not recovered to the levels of output seen before the financial crisis in 2008, despite the recent growth.

The Office for National Statistics said that beyond the effect of ticket sales it was difficult to put an exact figure on the Olympic effect, although it cited increased hotel and restaurant activity in London as well as strength from employment agencies.

The GDP figures were also enhanced by comparison with the previous three months, because the second quarter had an extra public holiday as part of the Diamond Jubilee celebrations in June, in addition to the unusually bad weather, which reduced growth.

Chancellor of the Exchequer George Osborne said,

“There is still a long way to go, but these figures show we are on the right track. Yesterday’s weak data from the eurozone were a reminder that we still face many economic challenges at home and abroad.”

Shadow chancellor Ed Balls also praised the news but said that the figures “show that underlying growth remains weak”.

He said,

“A one-off boost from the Olympics is welcome. But it is no substitute for a plan to secure and sustain the strong recovery that Britain desperately needs if we are to create jobs, get the deficit down and make people better off.”

The data is preliminary estimate from the Office for National Statistics, meaning that the third-quarter figures could be revised higher or lower.

David Kern, chief economist at the British Chambers of Commerce, said,

“While the news is positive, the estimate must be put in context.

The 1% GDP figure for the third quarter is affected by distortions in the second quarter due to the Jubilee and Olympic ticket sales. Compared to a year earlier, the figures show that the economy is stagnant.”

The Office for National Statistics said that the economy had contracted by 6.4% between the start of 2008 and the middle of 2009, and had since recovered about half of that output.

The level of output in the third quarter of 2012 was almost exactly the same as it had been in the third quarter of 2011.

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