Economy: GDP rises for consecutive quarters

THE government has claimed its austerity measures are finally beginning to work as the latest GDP figures showed the economy grew for a second quarter running.

George Osborne took to Twitter to hail the figures as a vindication of the coalitions austerity policies. Picture: AFP

But the increase of just 0.6 per cent was dismissed by political opponents and business critics as evidence the economy is “bumping along the bottom”.

According to the Office of National Statistics all four main sectors showed improvement – the first time Britain has been “firing on all cylinders” for nearly three years. It is the first time since 2011 the UK has seen back-to-back quarterly growth, and it doubled the 0.3 per cent figure for the last period.

The news was even better in Scotland where growth was recorded at 1.2 per cent.

The figures were in line with expectations, but evidence the struggling construction and manufacturing sectors managed to swing into expansion suggests a broad-based improvement.

Chancellor George Osborne took to Twitter to hail the figures as a vindication of the coalition’s austerity policies.

He tweeted: “Britain’s holding its nerve, we’re sticking to our plan, the economy’s on the mend. But still a long way to go.”

Prime Minister David Cameron said they showed Britain was on the right track and “building an economy for hard working people”. But Chief Secretary to the Treasury Danny Alexander warned against getting over excited.

He said: “It’s good news, not just that there’s been growth but in every sector we have seen improvement.”

However, some economists doubt the level of growth can be sustained in the second half of the year. While growth is seen as likely to continue, they suggest it could slip back to around 0.4 per cent for each quarter.

Vicky Redwood, of Capital Economics, said: “Even a 0.6 per cent quarterly rise is fairly mediocre after such a deep recession.”

Neil Bentley, deputy director-general of the CBI, said the figures showed Britain was on the road to recovery though there were likely to be “a few bumps ahead”.

Labour shadow chancellor Ed Balls said: “This economic growth is both welcome and long overdue. But families on middle and low incomes are still not seeing any recovery in their living standards.”

SNP finance secretary John Swinney pointed out that growth in Scotland was double the UK average. He went on: “These figures, while welcome, do not disguise the fact the recovery at the UK level continues to be fragile.”