Economy enjoys its fastest growth in two years
The UK economy recovered from the double-dip recession in the third quarter with its fastest pace of growth in more than two years, a leading thinktank has said.
The National Institute of Economic and Social Research (Niesr) forecasted 0.8% growth in gross domestic product (GDP) between July and September, but it also warned that the rebound was flattered by the impact of one-off events and would not be maintained.
Underlying GDP growth would be closer to 0.2% to 0.3% in the period without the boost from the Olympics and the catching-up effect from output lost due to the additional bank holiday in June, it said.
Niesr, which is independent from party political interests and receives no core funding from the Government, added: "Economic growth is expected to be at a significantly slower pace in the coming quarters."
The economy shrank by 0.4% between April and June following declines in the previous two quarters, confirming the double-dip recession as the longest since the 1950s.
The official estimate for the third quarter will be published by the Office for National Statistics on October 25.
While most economists have forecast a return to growth in the third quarter, a recent run of disappointing industry surveys from the manufacturing, construction and services sectors suggest a sustained bounce back is far from guaranteed.
The International Monetary Fund earlier offered a downbeat assessment of the economic outlook, predicting that the economy would shrink 0.4% this year and only grow by a tepid 1.1% over next year.
Chris Leslie, the Labour party's shadow Treasury minister, said that even if Niesr's 0.8% forecast is correct, the economy will still be 0.2% smaller than it was a year ago.
He said: "After two years of flatlining and with borrowing now rising to pay for the costs of economic failure, we need urgent action on jobs and growth to make up the ground we have lost and prevent more long-term damage being done.
"Sadly George Osborne's complacent speech this week didn't once mention growth or a single new policy to create the jobs and growth we need.
"And with the IMF warning that the Government's deep cuts and tax rises are having a bigger impact on the economy than previously thought, the need for a change of course is growing by the day."0.8%
Forecasted growth in GDP from July to September by thinktank