GDP figures released today show a growth of only 0.2% in the UK’s economy in the second quarter of the year. This is a disappointing result compared to the 0.5% growth in the three months prior to April.
The statistics office has named several causes of the decline including the extra bank holiday in April, the Royal Wedding and the aftermath of the Japanese earthquake. In addition, although the unusual hot weather in April boosted income for hotels, bars and restaurants, it also meant less money being spent on domestic fuels such as central heating. The Office of National Statistics has claimed that without these unforeseeable factors, we would have seen a 0.2% increase in economic growth since the first quarter meaning a 0.7% growth overall for the second quarter.
The decline in growth has been much criticised by officials such as the director of The Institute for Public Policy Research, Nick Pearce who stated “Last June, the OBR [Office for Budget Responsibility] predicted GDP would grow by 2.6% in 2011, but even if the economy gets back on track in quarters three and four this year, it will barely reach 1.2%,”
However, some do remain hopeful. James Knightly at ING Financial Markets said “With firms still looking to hire and invest… we remain hopeful of a gradual acceleration in GDP growth over the next 12 months.”
In addition, George Osborne, Britain’s Finance Minister has said “The positive news is that the British economy is continuing to grow and is creating jobs, and it is positive news too at a time of real international instability we are a safe haven in the storm.”
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