British Economic Growth Accelerates in First Quarter
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Version 0 of 1. LONDON — Britain’s recovery continues to gather pace with official figures on Tuesday showing growth of 0.8 percent in the first quarter of the year, confirming the country’s place among the world’s fastest-growing developed economies. The increase in gross domestic product, though marginally lower than what analysts had predicted, outdid the 0.7 percent recorded in the last three months of 2013. Overall G.D.P. was 3.1 percent higher in the first quarter of 2014 compared with the same quarter a year ago, according to the Office for National Statistics, which collects economic data. The data was welcomed by the chancellor of the Exchequer, George Osborne, who sees the speed of the British economic rebound as a vindication of his austerity policies, which have included big public spending cuts to stabilize finances. “Today’s figures show that Britain is coming back, but we can’t take that for granted,” Mr. Osborne said in a statement released by the British Treasury. “For the first time in a decade all three main sectors of the economy — manufacturing, services and construction — have grown by at least three percent over the last year.” According to Tuesday’s statistics, growth was stronger in services than in construction, and it decreased in agriculture. The statistics office said that storms and flooding, which gripped some areas of Britain early in the year, might have held back the construction sector but had not, over all, had an impact significant enough for them to be classified as a “statistical special event.” With a general election due next year, Mr. Osborne appealed to voters to stick with his approach. “The impact of the Great Recession is still being felt, but the foundations for a broad-based recovery are now in place,” he said. “The biggest risk to economic security would be abandoning the plan that is laying those foundations.” Nevertheless, economic output is still below its precrisis heights. From the peak in early 2008 to the trough in 2009, the economy shrank by 7.2 percent, according to the statistics office. While the first-quarter figures were marginally below market expectations of a 0.9 percent gain, the pace of recovery over the last year was “far stronger than anticipated,” according to a Bank of America Merrill Lynch research note. It noted that economic growth “climbed above the Euro area around a year ago, though is still a touch short of France, for example.” This month, Britain crossed an important threshold when growth in paychecks caught up with inflation after years of austerity and squeezed living standards. But because pay was held down for so long, many analysts believe that it may take time for most workers to feel the effect of the recovery. Whether or not voters start to feel better off in the next 12 months could play a decisive role in the next general election. The International Monetary Fund says that the British economy ought to grow by 2.9 percent in 2014. “The economy is motoring ahead with progress across many sectors as confidence continues to build among businesses and consumers,” said Katja Hall, chief policy director of the Confederation of British Industry, the main business lobby organization. “Growth in the first quarter was mostly driven by the service sector, but we’re also seeing our industrial base playing an important role in the recovery, with manufacturing output rising steadily.” Tuesday’s figures bode well for a forecast of 3.1 percent G.D.P. growth in 2014, an analysis by Berenberg Bank in London said. “We expect the U.K. recovery to continue at least at this pace as rising real incomes support household spending and low interest rates paired with strong confidence boost investment.” |