GDP grows by 0.2%

The economy grew by 0.2 per cent in the last quarter, according to a report by the Office for National Statistics released today

by Sophie McBain

The economy grew by 0.2 per cent in the last quarter, according to a report by the Office for National Statistics released today. This nevertheless reflects a modest improvement on the last two quarters when growth was broadly flat. Overall the economy has grown by 0.7 per cent in the last four quarters, which is the slowest level of growth since the first quarter of 2010.

The output of production industries fell by 1.4 per cent in the second quarter of this year, dragging down GDP growth by 0.2 per cent. According to the ONS, manufacturing output was weighed down by a number of special events, including the royal wedding, the Japanese earthquake and tsunami, the maintenance programme on North Sea installations and the unusually warm spring. The tsunami and royal wedding alone may have collectively reduced GDP growth by 0.5 per cent.

Output grew in the service industry in the last quarter, but is still significantly below its pre-recession peak, while retail sales volumes were essentially flat. Food stores have seen their biggest year-on-year fall in sales volumes since records began in 1988.

These figures will once more place chancellor George Osborne on a defensive footing, as Labour leaders will inevitably call on the government to reconsider its deficit reduction programme.