UK economy grows 0.8 per cent in first quarter

The UK economy registered its fifth successive quarter of growth in the opening quarter of 2014 but remains below its pre-recession peak, official estimates showed today.

The Office for National Statistics said output rose 0.8 per cent between January and March - slightly below the hopes of forecasters who had pencilled in a 0.9 per cent advance and the Bank of England, which was expecting 1 per cent growth.

But the ONS added that the economy still languished 0.6 per cent below its peak in the first quarter of 2008 six years on from the start of the recession. From peak to trough in 2009, the economy shrank 7.2 per cent.

The main growth driver was the UK’s dominant services industry, which accounts for around three-quarters of the economy’s output. But manufacturing grew by 1.3 per cent - its strongest quarter for nearly four years - bolstering hopes for a re-balancing in the recovery away from its reliance on consumer spending.

The Bank of England has held interest rates at record lows of 0.5 per cent since March 2009 to support the recovery as well as pumping £375bn into the economy via quantitative easing. Signs of rapid recovery in the housing market have raised concerns over a new bubble emerging but inflation has fallen to four years lows of 1.6 per cent, giving the Bank breathing space to keep rates low.

Jonathan Loynes, chief European economist at Capital Economics, said: “For now at least the figures point to a “Goldilocks” scenario of solid, but not excessive, growth which should allow both inflation and interest rates to remain at low levels for some time yet.”

Chancellor George Osborne said: “The impact of the Great Recession is still being felt, but the foundations for a broad based recovery are now in place.”

But union leaders pointed to the continuing squeeze on salaries after years of inflation running ahead of earnings. Paul Kenny, GMB general secretary, said: “‘Onwards and upwards’ will be the response of politicians and commentators to the latest GDP figures. Meanwhile back in the real world people know that while the recovery underway is welcome we have a very long way to go to climb out of the hole caused by the recession.”

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Guru Careers: Management Accountant

£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

Guru Careers: Project Manager / Business Analyst

£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power