The UK economy grew by 0.8% in the first quarter (Q1) of 2014, according to data
published Tuesday. The Office for National Statistics (ONS) said the economy is
now 0.6% smaller than its 2008 peak.
It was the fifth straight quarter of GDP growth and the longest positive run
since the financial crisis.
Growth was 0.7% in Q4 2013 and gross domestic product was 3.1% higher
in Q1 2014 compared with the same quarter a year ago.
In Q1 2014 GDP
was estimated to be 0.6% below the peak in Q1 2008. From peak to trough in 2009,
the economy shrank by 7.2%.
increased in three of the four main industrial groupings within the economy in
Q1 2014 compared with Q4 2013. In order of their contribution, output increased
by 0.9% in services, 0.8% in production and 0.3% in construction. However,
output decreased by 0.7% in agriculture.
George Osborne, chancellor of the exchequer,
said Tuesday's figure showed that "Britain is coming back", but that the
recovery could not be taken for granted.
"The impact of the Great Recession is still being felt, but the foundations for
a broad based recovery are now in place," he added. "The biggest risk to
economic security would be abandoning the plan that is laying those
Katja Hall, CBI chief policy director,
said: “The economy is motoring ahead with progress across many sectors as
confidence continues to build among businesses and consumers.
“Growth in the first quarter was mostly driven by the service sector, but we’re
also seeing our industrial base playing an important role in the recovery, with
manufacturing output rising steadily.
“We expect economic momentum to be maintained throughout the year with a
broader-based recovery as business investment takes off.”
Tony Wilson, head of strategy at the foreign
exchange specialists FEXCO, commented: "Deep down, and despite the
fact the economy continues to grow, the markets will be disappointed by this
"Coming a day after sterling surged to its strongest level against the dollar
for four and a half years, the slightly below-expectation GDP figure left the
markets feeling a touch deflated.
"But any downside for the pound is likely to be short-lived. With the IMF
predicting that the UK's will be the best-performing of the world's largest
economies this year and growing speculation of an interest rate rise, the strong
pound remains firmly in steady-as-she-goes territory.
"For the Bank of England, this figure is probably a blessing in disguise: it
confirms the economic recovery is robust, but not yet strong enough to force its
hand on interest rates.
"Five straight quarters of GDP growth suggests there is momentum in the economy,
although the concern, as ever, is that the services sector is the primary driver
"An economy that is so reliant on the services sector is a very volatile one.
The economy continues to grow but sceptics would argue that we are building
castles on sand."