The British economy grew slightly in the first quarter of 2013
April 25, 2013
Avoiding it's third recession in five years, British Gross Domestic Product (G.D.P) increased 0.3 percent in the first quarter of 2013, according to figures released April 25 by the Office of National Statistics (ONS). The slight incline almost exactly offset the contraction of the economy during the last quarter of 2012, reports the New York Times. Two consecutive quarters of a contracting economy are indicative of a recession.
"Doubts about the British economy's performance over the coming quarters will remain," said market analyst Nawaz Ali. "However, the positive figures end the triple-dip threat and will certainly ease pressure on the Bank of England to shift course on quantitative easing, which has been a big worry for currency investors."
The value of the pound increased on world currency markets on the announcement that triple-dip recession had been avoided, up 1.2 percent against the dollar. The expansion of the economy paired with the relative strength of the national currency will likely forestall attempts by the Bank of England to place more cash into circulation by purchasing government debt. Such stimulus oriented monetary policy is the quantitative easing that Ali was referring to.
Though the economy did grow slightly, the British economy has essentially been flat for the last 18 months, reports CBS, leading some to question Treasury head George Osborne's continued commitment to shrinking the deficit with sharp budget cuts. The U.K. recently had its triple-A credit rating downgraded by Fitch, the second rating agency to do so following Moody's.
According to ONS figures, business and financial services made up 29 percent of British G.D.P.. Mining and quarrying, though a smaller part of the total economy, saw a 3.2 percent increase during the time period. Construction, on the other hand saw declines, contracting 2.5 percent during the first three months of 2013.