UK Economy Grows in First Quarter

The UK economy grew by 0.8% in the first quarter of 2014, according to the latest figures.

It marks the fifth consecutive period of GDP growth, the longest positive run since the financial crisis.  Gross domestic product is a measure of a country’s economic activity, including all the goods and services produced in a given period.

The Office for National Statistics (ONS) also said the economy is now 0.6% smaller than its 2008 peak.

Chancellor George Osborne said Tuesday’s figure showed that “Britain is coming back”, but that the recovery could not be taken for granted.

He added, “The impact of the Great Recession is still being felt, but the foundations for a broad based recovery are now in place.  The biggest risk to economic security would be abandoning the plan that is laying those foundations.”

The ONS’s first growth estimate for the quarter is a slight increase on the 0.7% recorded for the final quarter of 2013, and a rise of 3.1% on the same period a year ago.

UK manufacturing was one of the strongest performers in the latest figures, with output growing by 1.3%, the ONS said, its strongest quarter for nearly four years and the service sector, which includes everything from hotels and leisure to accountants, grew by 0.9%, accounting for almost all of the overall quarterly growth.

Construction output, which grew by 0.3%, was affected by the storms and high rainfall in January and February, the ONS said.

Earlier this month, the International Monetary Fund (IMF) said it expected the UK to be the best performing of the world’s largest economies in 2014, with growth of 2.9% for the year.  The independent Office for Budget Responsibility (OBR) predicts 2.7%, and in February, the Bank of England (BoE) raised its 2014 forecast to 3.4%.

But despite the strong growth, the BoE has indicated it is unlikely to announce an interest rate rise any time soon.  Its stance has been bolstered by falling inflation, which dropped to 1.6% last month, its lowest rate in more than four years.

That fall, combined with the latest earnings figures from the ONS, means weekly earnings have finally caught up with inflation, after six years of falling behind