As ministers had hoped, today’s first estimate of GDP figures from the Office for National Statistics shows that the economy grew by 0.8 per cent in the third quarter of 2013. Citi had predicted 0.7 per cent, and while the economy is still 2.5 per cent below its pre-recession peak, ministers now have evidence of an upward trajectory, or, as the Treasury is describing it this morning, ‘real momentum’.
The Tories will use this now to argue that Labour has got it wrong on everything, while Labour sticks to its line of welcoming the growth but pointing out all the other bad things. The sight of Ed Balls rather sourly remarking that ‘after three years of flatlining, growth is welcome and long overdue’ might tickle Conservatives who have watched him tear into their economic strategy for years, but it his mutterings about the cost of living still need to be taken seriously: as James explained yesterday, the Tories still need to show how they would help those on low and average earnings.
The below chart, from the ONS, shows how the service sector is how back to pre-crash levels:
Update: Michael Saunders from Citi, the economist whom we at Coffee House trust the most, has this to say:-
Tags: Growth, UK politics
With reduced headwinds from deleveraging and the EMU crisis, plus supportive monetary conditions, we expect growth will remain strong in coming quarters, and we forecast GDP growth of 3.0% for 2014. If anything, business surveys suggest that growth could even exceed 3% in 2014. The latest consensus forecast is for GDP growth of just 2.2% in 2014. From the Q3 level, the QoQ gains in real GDP would need to slow to just 0.5% QoQ to hit that consensus forecast, and there is no sign of such a slowdown in business surveys or other lead guides. Growth this year is likely to be about 11⁄2%, well above the start of year consensus (1.0%) and another year of above-consensus growth probably lies ahead for 2014 as well.