Latest GDP figures will boost business confidence

25th October 2012

Commenting on the first estimate for GDP in Q3 2012, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: -The first estimate for GDP in the third quarter of 2012 confirms that the UK economy returned to growth, with the increase more than many commentators expected.

Both manufacturing and services have recorded increases over the quarter. However, the construction sector recorded another large decrease of 2.5%, meaning that the sector is more than 10% smaller than it was a year ago. While the news is positive, the estimate must be put in context. The 1% GDP figure for Q3 is affected by distortions in the second quarter due to the Jubilee and Olympic ticket sales. Compared to a year earlier, the figures show that the economy is stagnant, with growth for 2012 currently at 0.3%, three percent below the level seen at the beginning of 2008, when the recession started. John Longworth, Director General of the British Chambers of Commerce (BCC), said: -The news that the economy returned to positive growth in the third quarter of this year will be welcome news to many businesses. Firms up and down the country have been looking for ways to grow, to export to new markets, and take on more staff in the face of headlines declaring a double-dip recession. -This news will give many businesses the confidence to invest. But the government still has work to do to ensure than an economic recovery is sustainable. There are still challenges ahead, with weak global growth and the ongoing eurozone crisis creating difficulties for many firms. Ministers must listen to calls from businesses to help them get the finance they need, and support to find new international markets for their products and services. With the right measures over the medium to long term, for example investment in infrastructure, the creation of a British Business Bank, and meaningful deregulation, the government can put the UK economy firmly back on the road to recovery.

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