Phew! Britain avoids triple-dip recession by a whisker as economy grows by 0.3%… and Osborne claims economy is 'healing at last'
Overall figures better than expected easing pressure on George OsborneEconomy overall grew by 0.3% but construction slumps by 2.5%
Deputy PM Nick Clegg warns: 'We're not out of the woods yet'Labour blames coalition for slowest recovery for 100 years
Government borrowing remains stubbornly high at 120billionTory MPs accuse coalition of being 'timid' and 'complacent' about growth
IMF urged Britain to rethink pace of cuts in face of sluggish recovery
. But the economy as a whole is still 2.6 per cent below the 2008 peak.
The growth was fuelled by the super-charged services industry, which saw output increase by 0.6 per cent. Industries, including mining and quarrying also contributed to the rise.
The struggling construction industry slumped by 2.5 per cent in the first quarter of 2013, wiping out growth of 0.8 per cent in the previous quarter.
But experts said the snow and dire wintery weather 'appears to have had a limited impact' on growth.
The service industries including hotels and transport accounted for most of the growth in the economy, while construction suffered a 2.5 per cent slump
Business Secretary Vince Cable said the 'road to recovery would be a marathon, not a sprint' while Deputy Prime Minister Nick Clegg insisted the economy was not out of the woods yet
Deputy Prime Minister Nick Clegg told LBC 97.3 radio: 'That's a better number than I think many people had been anticipating, but it's one number for one quarter.
'We haven't triple-dipped, so that's obviously a welcome thing, but I don't want anyone to think that somehow we are out of the woods yet.
'We have still got a lot of work to do. The healing of the British economy is taking longer than we had anticipated and we will continue to work hard to make sure the country and the economy grow from strength to strength.'
There was also a strong boost from the transport, storage and communications sector, which saw growth of 1.4 per cent.
One impact of the cold winter weather was a surge in demand for electricity and gas saw output from the energy supply sector rise 0.5 per cent.
The retail sector fell in January and March, but a strong February helped it notch up growth of 0.3 per cent overall in the quarter.
But fears remain over the strength of the recovery, with key sectors such as construction and manufacturing still well below the peak in 2008.
Construction activity plunged by 2.5 per cent in the first quarter and still remains 18.1 per cent below pre-financial crisis levels.
Business Secretary Vince Cable, on a visit to Brazil, said: 'We've always said the road to recovery would be a marathon, not a sprint.
'Today's figures are modestly encouraging and taken alongside other indicators such as employment figures, suggest that things are going in the right direction.
'However there is still a long way to go and some serious issues such as the systemic lack of bank lending to SMEs, the weakness in the construction sector and the need to press further on trade and exports, which I am doing now on my visit to Brazil.
'These issues all need to be addressed before people feel like the economy is genuinely starting to recover.'
The government was hit by the news that an extra 70,000 were unemployed in the first three months of 2013
But Mr Osborne faced criticism from the left over the slow pace of the recovery.
Labour's Ed Balls said: '“These
lacklustre figures show our economy is only just back to where it was
six months ago and continue the picture of flatlining we have seen since
the last spending review.
'David Cameron and George Osborne have now given us the slowest recovery for over 100 years,' the shadow chancellor added.
Mark Sewotka, general secretary of the Public and Commercial Services, said: 'While Osborne and his millionaire allies will no doubt celebrate this
pitiful performance, the real effects of his catastrophic handling of
our economy are being felt by millions of people across the country.
'Osborne is not just incompetent, he is an economic vandal who doesn't
deserve to be in a job, let alone have his hands on the nation's purse
'As part of an alternative of investment in our economy, the very
obvious link should be made between the need to boost construction and
the millions of people waiting for social housing.'
Ahead of the release of the figures,
growing anxiety among Tory MPs about the state of the economy spilled
into the open, with the coalition facing charges of being 'complacent'.
Mark Field said: ‘When it came in, the coalition was pretty complacent
about growth. There wasn’t quite the urgency or passion to get things
moving at the outset.
still continue to flunk the decisions on big infrastructure projects
like nuclear power. We’ll also fudge through on aviation. I don’t think
it’s a very satisfactory situation.
it has been George Osborne’s great success that the markets have been
convinced we have a plan, but if market sentiment were to turn, it could
be fatal,' he told London Loves Business.
And Brian Binley complained: 'Our Chancellor is not a man usually found lacking in confidence or ability.
is precisely why it is so curious that he has proven to be so timid on
the one, over-riding issue so fundamental to the life of this
Parliament: restoring economic growth,' he told the Daily Telegraph.
Latest figures reveal how government borrowing remains stubbornly high at 120.6billion in 2012-13, down just 300million on the year before
The economy is said to be in recession if it shrinks for two quarters in a row.
The UK was plunged into recession five years ago in the wake of the global financial crash.
economy shrank for the last three quarters of 2008 and the first two of
2009, and though the initial recession then came to an end, subsequent
growth was sluggish and punctuated by setbacks.
The second dip came at the end of 2011, which lead to three quarters of negative growth lasting into the middle of 2012.
After the Olympics, the economy bounced back with impressive growth of 0.9 per cent in from July to September.
the good news was short lived and in the last quarter of 2012 the
economy shrank again by 0.3 per cent as the Olympic effects evaporated.
Britain came close to a triple-dip recession during the stop start recovery in after the 1973 oil crisis.
Tory MPs Brian Binley (left) and Mark Field accused the Chancellor of being timid and complacent about the need for bold action to secure strong economic growth
The results come after a week of dire economic news for Mr Osborne, in which the UK’s AAA credit rating was again downgraded, unemployment rose by 70,000 and the International Monetary Fund warned he was playing with fire’.
Yesterday the Chancellor moved to beef up his flagship Funding for Lending scheme (FLS) in an attempt to help more small businesses secure loans, after they dropped by three per cent last year.
Under the original scheme, banks can access low-interest funding in return for lending to households and businesses. Now, they are being told that the amount of funding available will be increased up to ten-fold when based on lending to SMEs – defined as businesses with a turnover of less than 25 million.
Bank figures last week showed net lending to companies slumped by 4.8 billion in the three months to February, declining by 2.8 billion in February alone.
Six years after the financial crash which brought the economy to its knees, there is still little to cheer.
Latest unemployment figures revealed a rise of 70,000 in the numbers out of work. Ministers point to an extra 1.2million private sector jobs but were disappointed to see an end to recent drops in jobless statistics.
Borrowing fell only slightly last year to 120.6billion, just 300million lower than in 2011-12.It was worse than City hopes for a 117 billion deficit in the financial year.
Asked if was ‘getting a bit panicky’ about the economy's parlous state, Mr Osborne replied: ‘No, no, no. The answer is no.’
Total public sector net debt was a record 1.186 trillion in March, equating to 75.4 per cent of GDP and up from 1.1 trillion a year earlier.
The International Monetary Fund last
week cut the UK's growth forecast growth from 1 per cent to 0.7 per cent
for this year and 2014's projection from 1.9 per cent to 1.5 per cent,
noting the recovery was 'progressing slowly'.
IMF chief Christine Lagarde departed
from long-standing support for Mr Osborne, suggesting a change of course
was needed from his austerity plans.
She said: 'We have said that should
growth abate, should growth be particularly low, then there should be
consideration to adjusting by way of slowing the pace.
'Consideration should be given if growth weakens… the growth numbers are certainly not particularly good,' she said last week.
Of the major economies listed in the IMF's World Economic Outlook, the prediction of 0.7 per cent growth for 2013 puts the UK well below the US, Canada, Japan and much of Europe
International Monetary Fund (IMF) Managing Director Christine Lagarde suggested Mr Osborne should consider changing the pace of his deficit reduction programme
IMF chief economist Olivier Blanchard has accused Mr Osborne of ‘playing with fire’ by pressing ahead with cuts despite a lack of growth.
Mr Blanchard has been a longstanding critics of the UK’s austerity programme. Last week he said: ‘The UK economy has turned out to be somewhat weaker than had been foreseen, so our view is that the pace of consolidation ought to be reconsidered, and we’ll want to come and have some discussions about that.’
It also emerged that Cabinet Secretary Sir Jeremy Heywood had privately voided frustration at the different approaches to the economy taken by Mr Osborne, David Cameron, Nick Clegg and Vince Cable.
Sir John Gieve, the former deputy governor of the Bank of England, also questioned whether the Chancellor is truly in charge of his economic policy.