Cable warns recovery is a marathon, not a sprint as Britain misses triple-dip recession by a whisker


Cable warns recovery is a marathon, not a sprint as Britain misses triple-dip recession by a whisker
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

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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

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'

Deputy Prime Minister Nick Clegg insisted the economy was not out of the woods yet

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

A recession is defined as two
consecutive quarters of decline and Britain has suffered two since the
financial crisis struck – the first in 2008-09 and the second in
2011-12.

Growth was driven by the dominant
services sector, a bounce-back in North Sea oil and gas production, and
soaring demand for energy, as households turned up the heating during
the cold snap.

Output from services firms – which range from hairdressers and hotels to accountants and train operators – rose 0.6 per cent.

Industrial production rose 0.2 per
cent, thanks largely to a 3.2 per cent increase in ‘mining and
quarrying’ as North Sea production recovered from extended maintenance
work on crucial oil rigs at the end of last year. Meanwhile the energy
supply sector rose 0.5 per cent. But factory output fell 0.3 per cent
and construction was down 2.5 per cent as vast swathes of the economy
remained firmly in recession.

It also appears increasingly likely
that the Office for National Statistics will revise away last year’s
‘double dip’ recession.

The change in GDP in the last quarter
of 2011 was recently revised from minus 0.4 per cent to minus 0.1 per
cent – and further amendments are expected, particularly to the first
quarter of 2012, which was also just minus 0.1 per cent.

Lib Dem Business Secretary Vince
Cable said that the growth was ‘modestly encouraging’ but added that the
recovery was a ‘marathon, not a sprint’.

The government was hit by the news that an extra 70,000 were unemployed in the first three months of 2013

The government was hit by the news that an extra 70,000 were unemployed in the first three months of 2013

Meanwhile, Shadow Chancellor Ed Balls
made the startling claim that the deficit had only fallen because of
the ‘inheritance’ left by the Labour government.

He added: ‘These lacklustre figures
show our economy is only just back to where it was six months ago… If
we’re to have a strong and sustained recovery we need urgent action to
kickstart our economy and strengthen it for the long-term.’

John Mann, a Labour MP on the Commons
Treasury Select Committee, claimed the figures confirmed ‘the
Japan-isation of the British economy’.

Latest figures reveal how government borrowing remains stubbornly high at 120.6billion in 2012-13, down just 300million on the year before

Latest figures reveal how government borrowing remains stubbornly high at 120.6billion in 2012-13, down just 300million on the year before

He said: ‘In Japan, the economy
stagnated. Sometimes it went down to below zero, sometimes just above it
but it kept on this very low-growth trend and kept there for 15 years.

‘We are in the same cycle and breaking out of it will need a change of policy.’

Weak growth has pushed Mr Osborne’s
plans to cut the record deficit racked up by Labour off course, and
borrowing fell by just 300million to 120.6billion last year.

MP Brian Binley

Mark Field MP

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

But the return to growth will have
come as a huge relief to the Treasury just days after Britain suffered
another downgrade to its AAA credit rating, this time by ratings agency
Fitch, and the Chancellor was criticised by the International Monetary
Fund.

IMF chief economist Olivier Blanchard
said Mr Osborne was ‘playing with fire’ by pressing ahead with
austerity while the economy was so weak.

Now the Chancellor’s position will be bolstered as he prepares to defy any formal recommendations from the IMF to change course.

Rob Carnell, an economist at banking group ING, said the figures were ‘one in the eye’ for the IMF and the ratings agencies.

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

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

Getting better but by George, it’s Slow!, by Alex Brummer

The unrelenting gloom over Britain’s economic prospects has lifted, with growth making an unexpectedly bright reappearance in the first three months of the year.

Timing could not be better for George Osborne ahead of what had promised to be a bruising encounter with the examiners from the International Monetary Fund, who are due in London early in May.

The 0.3 per cent lift in output, after a decline in the final months of last year, was described as ‘lacklustre’ by the Chancellor’s critics on the Labour benches.

But it does mean that the fearful vision of a triple dip, so avidly discussed by broadcasters ahead of the data being published, has been vanquished.

Indeed, revisions to past data suggest the double dip – two successive downturns in the economy since a peak in 2008 – will also turn out to have been a fiction.

This does not mean Britain is in the midst of a storming upturn.

But what is absolutely clear is parts of the economy are, with the help of the shock treatment of record low interest rates, back to where they were before the ‘Great Recession’ of 2009-10.

Behind the emerging recovery is a sharp bounce back in the services sector, which includes everything from the high street to financial services and creative industries, and comprises some 80 per cent of the nation’s output.

International Monetary Fund (IMF) Managing Director Christine Lagarde

Mr Osborne has faced criticism for the lack of growth

International Monetary Fund (IMF) Managing
Director Christine Lagarde suggested Mr Osborne should consider changing
the pace of his deficit reduction programme

It is now 1.5 per cent higher than a year ago and has fully recovered from the trough of the recession. The buoyancy of services is one of the reasons some 500,000 new private sector jobs have been created in Britain over the past year.

Unfortunately for the Chancellor, his desire to rebalance the UK economy back to manufacturing and exports is not going so well. Manufacturing remains deep in the doldrums, despite a sharp devaluation of the pound that was meant to help exports.

The depression in manufacturing can largely be blamed on the disastrous conditions in the eurozone, with unemployment in Spain surging to an incredible 27 per cent.

Construction is also disappointing, partly because of the exceptionally cold winter weather than dragged on for months.

However total industrial output is on the mend, largely as a result of greater output from North Sea oil and gas that was sharply down late last year.

The Chancellor had expected a difficult encounter with the IMF team.

The Fund’s top economist, Olivier Blanchard, has argued publicly that Britain is ‘playing with fire’ with its continuing austerity measures.

The latest numbers suggest that even with our biggest trading partner in the eurozone mired in chaos the UK economy is still capable of expanding, if not at the pace the Government would like to see.