Tweet
26 July 2011
Last updated at 05:31 ET
Growth in the UK economy slowed in the three months to 30 June, partly because of the extra bank holiday in April.
Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics.
It grew by 0.5% in the previous three months, but contracted by 0.5% in the last three months of 2010.
The ONS said growth had also been slowed by some other one-off factors, including the effects of the Japanese earthquake and tsunami.
'Safe haven' "The positive news is that the British economy is continuing to grow and is creating jobs," said Chancellor George Osborne.
"And it is positive news too that at a time of real international instability we are a safe haven in the storm."
Please turn on JavaScript. Media requires JavaScript to play.
The ONS' Joe Grice blamed the slow growth on the Royal Wedding
But others have said that the slowing growth is a serious problem for the government and it should take steps to boost growth.
"The UK economy might as well still be in recession, even if technically it isn't," said Nick Pearce, director of the Institute for Public Policy Research (IPPR).
"Outside of London, in particular, the recession continues to be felt."
Shadow chancellor Ed Balls has called on the government to reverse the increase in VAT that took effect at the beginning of the year.
The ONS highlighted a number of special events in the second quarter that may have affected the GDP figures.
Continue reading the main story Analysis
Today's GDP number would be disappointing if expectations had not already been set so low.
It is far below what we might have hoped for and significantly below the growth expected this year from most of our main trading partners.
On average, the latest independent forecasts have the UK growing by 1.3% in 2011, significantly below the official OBR forecast of 1.7%.
That compares with a consensus forecast of 2.5% for the US, 3.4% for Germany and 2% for France.
They were: the additional bank holiday for the royal wedding, the wedding itself, the after-effects of the Japanese earthquake and tsunami, the first phase of Olympic ticket sales and the record warm weather in April.
The ONS estimated that without these one-off factors, GDP would have been 0.5 percentage points higher.
Not all of the one-off factors were negative. Warm weather in April, for example, boosted spending on hotels and restaurants, but reduced spending on domestic fuel.
Nonetheless, analysts say that the ONS statement that GDP would have grown by 0.7% without one-off factors is good news.
"Given the comments from the ONS, this is a better-than-hoped-for report, but with confidence remaining weak and household finances under major pressure the underlying trend remains subdued," said James Knightley at ING Financial Markets.
"Nonetheless, with firms still looking to hire and invest... we remain hopeful of a gradual acceleration in GDP growth over the next 12 months."
Alan Clarke at Scotia Capital said: "What seems to have driven this is a stellar bounce-back in services output after the Easter fall, but 0.2% growth is nothing to get the champagne corks popping."
"The biggest drag on growth at the moment is inflation and that's eating into household disposable income and holding back consumer spending."
Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Settlement Statement | WordPress Tutorials
Gross Domestic Product (GDP) grew by 0.2% in the second quarter, according to the Office for National Statistics.
It grew by 0.5% in the previous three months, but contracted by 0.5% in the last three months of 2010.
The ONS said growth had also been slowed by some other one-off factors, including the effects of the Japanese earthquake and tsunami.
'Safe haven' "The positive news is that the British economy is continuing to grow and is creating jobs," said Chancellor George Osborne.
"And it is positive news too that at a time of real international instability we are a safe haven in the storm."
Please turn on JavaScript. Media requires JavaScript to play.The ONS' Joe Grice blamed the slow growth on the Royal Wedding
But others have said that the slowing growth is a serious problem for the government and it should take steps to boost growth.
"The UK economy might as well still be in recession, even if technically it isn't," said Nick Pearce, director of the Institute for Public Policy Research (IPPR).
"Outside of London, in particular, the recession continues to be felt."
Shadow chancellor Ed Balls has called on the government to reverse the increase in VAT that took effect at the beginning of the year.
The ONS highlighted a number of special events in the second quarter that may have affected the GDP figures.
Continue reading the main story Analysis
Today's GDP number would be disappointing if expectations had not already been set so low.
It is far below what we might have hoped for and significantly below the growth expected this year from most of our main trading partners.
On average, the latest independent forecasts have the UK growing by 1.3% in 2011, significantly below the official OBR forecast of 1.7%.
That compares with a consensus forecast of 2.5% for the US, 3.4% for Germany and 2% for France.
They were: the additional bank holiday for the royal wedding, the wedding itself, the after-effects of the Japanese earthquake and tsunami, the first phase of Olympic ticket sales and the record warm weather in April.
The ONS estimated that without these one-off factors, GDP would have been 0.5 percentage points higher.
Not all of the one-off factors were negative. Warm weather in April, for example, boosted spending on hotels and restaurants, but reduced spending on domestic fuel.
Nonetheless, analysts say that the ONS statement that GDP would have grown by 0.7% without one-off factors is good news.
"Given the comments from the ONS, this is a better-than-hoped-for report, but with confidence remaining weak and household finances under major pressure the underlying trend remains subdued," said James Knightley at ING Financial Markets.
"Nonetheless, with firms still looking to hire and invest... we remain hopeful of a gradual acceleration in GDP growth over the next 12 months."
Alan Clarke at Scotia Capital said: "What seems to have driven this is a stellar bounce-back in services output after the Easter fall, but 0.2% growth is nothing to get the champagne corks popping."
"The biggest drag on growth at the moment is inflation and that's eating into household disposable income and holding back consumer spending."
Powered By WizardRSS.com | Full Text RSS Feed | Amazon Plugin | Settlement Statement | WordPress Tutorials