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Alistair Darling hails growth but says: This is no time for complacency
Paul Waugh, Deputy Political Editor26 Feb 2010
Gordon Brown won a pre-election boost today when new growth figures showed that Britain's economy pulled out of recession more strongly than previously thought.
Gross domestic product increased by 0.3 per cent in the last quarter of last year after the Office for National Statistics revised upwards its figures for manufacturing, consumer spending and the service sector.
The ONS's first estimate of growth a month ago put the figure at a wafer-thin 0.1 per cent, prompting fears that the economy could easily slip back into negative growth. Today's figure was ahead of the 0.2 per cent expected by the markets. The UK's powerhouse services sector — which accounts for 75 per cent of output — performed much more strongly than first thought, up from 0.1 per cent to 0.5 per cent.
The figure is the strongest growth for services since before the recession began in the first three months of 2008.
With a general election to be held soon and the Prime Minister pinning his hopes on his economic record, Labour was privately delighted by the figures.
But Chancellor Alistair Darling was keen to stress that Britain was still not out of the woods economically and warned that Tory plans for spending cuts could derail the fragile recovery.
Stronger performance by engineering, transport and chemical factories saw manufacturing also increase by double the figure previously announced, up to 0.8 per cent.
Figures for household spending also hinted at an upturn in consumer spending as the impact of record low interest rates and VAT cuts worked through the economy. Household expenditure rose by 0.4 per cent over the quarter — the biggest rise since the opening three months of 2008.
The overall figures also showed that the 2008/9 recession had been much more savage than previously thought.
Revisions to previous quarters show that the recession was the deepest on record, with a 6.2 per cent peak-to-trough slump exceeding the six per cent fall seen 30 years ago in the early years of Margaret Thatcher's leadership.
The Chancellor said: “I've always said that the economy would return to growth by the turn of 2009 and today's second estimate continues to bear that judgement out.
“While it is welcome to see an upward revision, recent data in the EU and elsewhere has indicated that there are risks and uncertainties to this recovery and there is no room for complacency. Withdrawing the support that has helped us get to this point would put the recovery at risk, a view endorsed by the IMF and the IFS over recent weeks.”
Shadow chancellor George Osborne said that the figures underlined his calls to start now on tackling the UK's ballooning £178 billion deficit.
“This upward revision of last year's growth figures is welcome. It strengthens the Conservative argument that we must now make a start on dealing with the debts that Gordon Brown has run up. That is how we will bring back confidence to the economy and deliver a proper, sustainable, job-creating recovery.”
Liberal Democrat Treasury spokesman Vince Cable warned that the figures for the first three months of this year could still slip back, particularly because the VAT cut was reversed in the new year.
“The economy is still very fragile, this is not a good figure.” he said, adding that “it underlines the folly” of trying to make big spending cuts this year and said that it showed Tory policies would harm the economy.
Reader views (19)
All - when your Bank is printing money to buy up debt from the private sector this generates a 'feel good' factor in the economy - and it inflates the problems - printing money can not go on indefinately unless you want a one hundred trillion pound note (like thge ZIM Dollar) or take you salary home in wheelbarrows...
- Christian Ball, London, UK, 01/03/2010 09:13
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Gordon Brown to Alistair Darling:
"A pinch and a punch for the first day of the month"
- Frank, Copenhagen, Denmark, 01/03/2010 09:11
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Alistair Darling-"Look, I'm so happy with myself that I've treated myself to having my nails done."
- Frank, Copenhagen, Denmark, 28/02/2010 15:12
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Seems to me that Darling needs his piano tuning
- David Botham, Stoke-on-Trent. uk, 27/02/2010 20:56
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How sad,even a little good news is treated with derision,just carry on talking our country down.
- Nick Smith, London, 27/02/2010 14:56
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It does'nt matter what brown and darling say and it doesn't matter what the polls say the people have already made up their minds about these very corrupt politicians. Their time is up. Wait till the people read about Harriet Harmans husband has just been parachuted into a labour safe seat in Birmingham.
- Ken Winter, bishop auckland england, 26/02/2010 23:50
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Will dear Alistair explain to the unemployed, the folks who have had their homes reposseded, the students who paid thousands and have no future (except to pay exorbitant fees to fat cat bankers for overdrafts and loans)how he "hails growth"? All we British people see is at least 20 years of austerity and misery thanks to him and his "prime" minister.
There is no doubt that despite Gordon Brown's hopes for a positively memorable legacy, he will be forever remembered as the dour Scot who destroyed the future of our once proud nation,
- David Griffiths, Llanfyllin, Wales, 26/02/2010 22:21
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We're on the way to recovery. Rejoice.
- Dhan Raj, Basildon, 26/02/2010 17:56
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These two have had enough time to do what they promised ,if they have'nt done it by now why should we vote for them ??
- Davey_Bouy, Chertsey, 26/02/2010 17:47
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Let's get this right, the cause of the collapse and recession was the bankers.
The bankers traditionally vote Tory.
And we're going to reward the bankers' greed by giving them a Tory Government...
Some mistake surely?
- Michael Rennej, London, 26/02/2010 17:39
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To have those two smirking in a picture hailing growth is an insult and I best suggest you remove it before someone hacks your site and does it for you ... It was only last week that they announced record tax for January and now you hail growth .. just how much growth do you think is coming with taxes paid? and how much is from the black economy which is keeping many from going to the wall?
This is all trumped up figures to keep Fitch credit agency at bay and stop the pound from plunging ... It is not these two goons who will get Britain back on its feet and most people know it
- Michael, London, 26/02/2010 17:37
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look no hands, now ladies and gents watch the white rabbit while i pull another joker from the pack and find the lucky lady.
- M.O'Brien, london.uk, 26/02/2010 17:29
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I don't think the Tories are to be trusted with the economy or anything else for that matter. I agree with the Obama assessement of Cameron - a lightweight.
Come on Gordon - you can do it.
- Helen, London, 26/02/2010 17:16
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Does this mean we can expect to hear Gordon proclaiming that he has once again saved the world and put and end to the boom and bust cycle, because it sure doesn't feel like he's done either.
- St, London, 26/02/2010 17:15
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so when's the election?
why should Brown dictate when we, the people , can have our say about this shambles?
- Oggy Oggy Oop, uk, 26/02/2010 16:45
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Call me sceptic but I have no trust whatsoever in Dizzy Derling and Crash Gordon. We are in a deep UK depression - people are unhappy and are not making a living except when you work for the state. We are taxed to death and all that to pay the gold plated bureaucrat pensions.
- Georgie, Islington, London, 26/02/2010 16:20
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What someone has failed to mention here is that the peak to trough slump was 6.2%. Which was far worse than in the Thatcher years. So we still have to make up 6% growth to get back where we were before the recession struck.
The last quarter of 2009 was heavily distorted by many factors such as the VAT cut, xmas/boxing day shopping/ sales, stamp duty holiday drawing to a close etc. In all probability the economy was flat and not growing. The real test will be the first and second quarters of 2010. If they are in positive territory, then there may well be light at the end of the tunnel. I think the jury is still out the moment. So don`t break open the champagne just yet.
- Brian G, Norfolk Gorleston, 26/02/2010 15:33
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Not only has Darling lost billions of our taxes, but he also appears to have lost his piano.
- Nobby Clark, Perth, the Scottish one, 26/02/2010 15:23
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I think this was in spite of the Government's action rather than because of it. We, the public still have to pick up the bill!
- Saxon, Cowes UK, 26/02/2010 13:17
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