UK economy grows by paltry 0.2 pct in Q2
LONDON (AP) — Britain's economic recovery remains lackluster as official figures Tuesday showed growth of only 0.2 percent in the second quarter of the year from the previous three month period, in part because of the disruption caused by the wedding of Prince William and Kate Middleton.
The statistics office also said the economy during the period was heavily influenced by the aftermath of the Japanese earthquake and tsunami, record high temperatures in April and the start of ticket sales for the 2012 Olympic Games in London.
The preliminary growth figure, which is subject to revision, was in line with market. But it may put new pressure on the government and the Bank of England to take steps to quicken up the pace of recovery.
The weak second quarter followed six months of essentially no growth, with a drop of 0.5 percent in the fourth quarter of last year followed by a gain of 0.5 percent in the first quarter.
"Today's figures support our view that securing economic recovery remains tough," said Scott Carfe, an economist at the Center for Business and Economic Research.
Like other major economies, Britain suffered badly in the recession that followed the banking crisis of 2008 and at this pace it's going to take a few more years before it recoups the output lost during the downturn.
Despite the tepid recovery, Britain's finance minister George Osborne said he was not going to change course. The government is in the middle of a big fiscal squeeze, designed to get the country's public finances back on track.
"The positive news is that the British economy is continuing to grow and is creating jobs," Osborne said. "And it is positive news too at a time of real international instability we are a safe haven in the storm."
A more detailed look at the quarterly figures suggest that the extra holiday for the royal wedding took its toll on output as it came soon after two days of holidays for Easter — some companies including Nissan took the opportunity to close down for two weeks to deal with supply interruptions attributable to the tsunami.
In addition, the 300 million pounds ($490 million) spent on Olympic tickets was equivalent to 0.1 percent of GDP, the statistics agency said. However, under international accounting conventions it won't be counted a contribution to GDP until the third quarter of 2012 when the games take place in London.
Britain's slow economic recovery has reinforced market expectations that the Bank of England will not be raising interest rates anytime soon. Some observers, including business secretary Vince Cable, have suggested that the Bank of England should revive its economic stimulus program of "quantitative easing." The program pumped 200 billion pounds ($320 billion) into the economy through asset purchases in 2009.