The data shows that the economy grew 1.0% compared to the previous quarter, in which it contracted 0.4pc. While this is good news for the economy and appears to show the end of Britain’s double-dip recession, critics have also warned that it may not be quite as it seems, as the extra bank holiday in Q2 (the Queen’s Jubilee) wiped 0.5pc off growth, which would therefore inevitably show as a bounce-back in the third quarter.
The Chancellor welcomed the news, commenting: “There is still a long way to go, but these figures show we are on the right track. This is another sign that the economy is healing.”
Glenn Uniacke, senior dealer at the forex specialists Moneycorp, commented:
“The markets had expected strong growth. What they got was the impression that a blue touch paper had been lit.
“For the economy to have lurched skyward after such a prolonged slump appears an impressive turnaround. Equities and the Pound responded accordingly, but scratch a little deeper and the performance looks a little less scintillating.
“Much of the boost is due to one-off factors like the Olympics, and the natural rebound effect that follows a quarter in which working days are lost. So strip out the exceptional factors and the figure is less breathtaking – closer to zero. And after a pitiful start to the year, the annual trend is likely to be largely flat.
“With the promised supply side reforms yet to materialise, there’s every chance that Q4 will disappoint compared to Q3′s surge.” Jason Conibear, trading director at forex specialists, Cambridge Mercantile, commented: “We’ve emerged from the double dip but nobody is denying that we’ve had the wind behind us. It’s hard to quantify but the real figure, minus the Olympic boost and other one-off factors, is likely to be roughly half this. “We’re back in the black and it’s better than many had anticipated. This better than expected data comes on the back of a number of positives in recent weeks, not least falling inflation, unemployment and stronger retail sales but major question marks remain over the UK economy. The UK economy is fundamentally tied to the Eurozone, our biggest export market, and that keeps the domestic economic recovery on a knife edge. “With the global economy as finely balanced as it is, there’s every chance we could see more contraction during 2013.”
Donna Houguez, Market Analyst at Quickmovenow.com, one of the UK’s largest residential property buyers, comments:
“Stripping out the one-off effects of the Olympics, quarter three’s GDP figures showed encouraging growth. With unemployment and inflation down too, we would hope to be seeing a return of buyer confidence and an uplift in the housing market.
However, because inflation has been running higher than wage increases, and due to the difficulty of borrowing (set to become even harder with the introduction of new mortgage laws in 2014), this is not materialising.
While this return to growth is positive news for the wider economy, lending scarcity and the rising cost of living, together with a contraction in the construction sector, mean that people simply cannot afford to buy houses.
All Quickmovenow.com’s indicators are showing a struggling housing market, particularly in the north, but now also in some commuter and London areas.
Until all of these concerns begin to resolve, we don’t expect to see a significant reflection of this return to growth in the residential property market.”
Andy Brown, Investment Director at Prudential’s Portfolio Management Group, said:
“Investor sentiment reacts to good news like this much more slowly than it does to bad news, such as economic signs of a downturn. We’re in a trendless but volatile period so celebration at this point may be an overreaction.” Steve Box, HSBC Head of Trade and Receivables Finance, UK, said:
“These latest GDP figures show encouraging improvement in the UK’s overall economic conditions. Our Growing British Business report shows that the majority of UK businesses are confident of growth over the next two years demonstrating the tenacity and determination with which business leaders are rolling up their sleeves and driving growth. Ultimately, the approach of these inspirational business leaders will have a positive knock-on effect for UK PLC as a whole.”
“The rise in employment rates also reflects our report in that business leaders are planning to invest in staff over the next two years in order to grow their business. HSBC is well positioned to help businesses get ahead when it comes to growth, for example by offering the business employer loan, companies can take advantage of lower interest rates if they have hired in the last six months. We urge UK businesses looking to succeed in the current economic environment to come talk to us.”
courtesy of myintroducer.com