Economy: UK Grows by 0.5%

Osborne says UK economy still faces a difficult journey

Osborne says UK economy still faces a difficult journey

According to the latest figures from the Office for National Satistics (ONS), the UK economy has grown by 0.5% in the third quarter of this year, or the three months to September.

The growth in the third quarter compares with the just 0.1% gross domestic product (GDP) growth of the quarter before.

One-off factors

However, analysts say that the miniscule second quarter growth was due to one-off factors such as the earthquake and tsunami in Japan this March. In addition, the extra bank holiday for the royal wedding is said to have significantly affected figures from the April to June period of this year.

Because of this, experts warn that the perky figures of the third quarter are not the massive rebound that they seem to be.

Still, there is still significant growth to be celebrated in the production sector, which rose 0.5%. Previously the sector had seen a 1.2% fall. In addition, the service sector saw a growth of 0.7%, compared with just 0.2% growth in the second quarter.

Still, experts say that for GDP to have grown only 0.5% in the third quarter, after a suppressed Q2, the overall state of the economy remains weak.

Others say that while the figures overstate the strength of the economy without proper interpretation, they are likely to be “as good as it gets” for the near future.

However, Chancellor of the Exchequer George Osborne has released a statement calling the ONS’s growth figures “a positive step,” as they are better than previously forecasted.

He continued by saying that the British economy has a “difficult journey” ahead, but that the government is “determined to finish this journey.” Osborne also shifted some blame for the economy on uncontrollable outside forces that are suppressing growth, such as the crisis in the eurozone.

Political rebuttals

The Chancellor also stuck to his guns about austerity measured when asked if they were coming to a close, saying that reducing the deficit is “the only route that will take us to prosperity and recovery.”

However, shadow chancellor Ed Balls said that the government should not use the eurozone debt crisis as their scapegoat when asked about the nearly stagnant economy, and that austerity measures are continuing to hurt the economy.

Balls commented that the recovery has nearly ground to a halt well before the eurozone crisis became a media frenzy in recent month. He also said that the government’s spending cuts and tax hikes go “too far and too fast.”

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