Economy avoids triple dip recession
The UK has managed to avoid a triple dip recession after official figures revealed that the economy grew by 0.3% in the first three months of the year.
But analysts have warned the economy is still weak and insisted that it is premature to hail the growth of the beginning of a sustained recovery.
The GDP expansion, which came as a deep relief for George Osborne, was powered by a relatively robust performance from the UK's dominant services sector where output increased by 0.6% on the previous quarter. The Chancellor said the figures were evidence that the economy was healing.
"Despite a tough economic backdrop, we are making progress," he said. "By continuing to confront our problems head-on, Britain is recovering and we are building an economy fit for the future."
Finance Minister Sammy Wilson (below) said the data backs up figures from the new composite index of the Northern Ireland economy, released earlier this week, which showed that economic activity had grown in three out of the last four quarters.
In a release yesterday he railed against "recent negative reporting that Northern Ireland may be heading for a triple dip recession.
"It is not helpful to the industry and businesses when people speculate about Northern Ireland heading for triple dip recession. The fact the Chancellor has said only this morning that there are signs that UK economy is healing is positive."
Yet the figures from the Office for National Statistics paint a different picture and show that the level of UK GDP remains 2.6% below its peak in the first quarter of 2008.
Other economies such as Germany and the US have already recovered all the ground they lost in that crisis.
And there were warnings from City experts that the UK economy is by no means out of the woods. "The recovery still faces significant obstacles ahead, with households still experiencing falling real pay and policymakers still struggling to get bank lending to rise," said Vicky Redwood of Capital Economics.
Danske Bank economist Angela McGowan said the data boded well for Northern Ireland.
"The fact that the national economy has avoided a triple dip is good news for the local economy too," she said. "Until Northern Ireland is fiscally independent it is expected to remain heavily dependent on subsidies from HM Treasury.
"Any continued downward spiral in the UK economy would have repercussions locally and similarly any growth in the UK will work to ease pressure on local public spending allocations."
The quarter's growth will ease the pressure on the Chancellor who has come under unprecedented pressure recently to ease his austerity programme.
The International Monetary Fund recommended last week that the Chancellor should slow his planned programme his cuts in order to support the recovery.
A team from the IMF will arrive in London next month to carry out the fund's annual health check of the UK economy and there are expected to be tense negotiations with the Treasury over the coalition's fiscal policy. These figures are likely to strengthen the Chancellor's hand in those negotiations.
The percentage of UK economy's growth
The level of UK GDP, still below its 2008 peak
The output increase in the services sector