UK’s GDP Grows by Just 0.2% in Second Quarter

Chancellor of the Exchequer George Osborne arrives in Downing Street to attend the weekly Cabinet meeting. Osborne said the latest GDP figures for the UK were 'positive news'. (Oli Scarff/Getty Images)

The UK’s Gross Domestic Product (GDP) grew by 0.2 per cent in the second quarter of this year (April to June), according to the Office for National Statistics (ONS). It had grown 0.5 per cent in the first quarter.

Chancellor George Osborne has welcomed the figures, but critics have called on him to reverse recent tax increases and public spending cuts.

Output in the production industries decreased by 1.4 per cent, while output in the construction and service sectors each increased by 0.5 per cent.

The ONS theorised that the extra bank holiday due to the Royal wedding may have had a negative effect on production. It blamed the Japanese tsunami for adversely affecting the manufacturing sector and April’s warm weather for adversely affecting gas and electricity supply. Hotels and restaurants, however, seem to have benefited from the good weather and additional bank holiday.

Mr Osborne said: “The positive news is that the British economy is continuing to grow and is creating jobs.

“And it is positive news too that, at a time of real international instability, we are a safe haven in the storm. Our economy is stable at this time because this government has taken the difficult decisions to get to grips with Britain’s debts.

“Abandoning that now, as some argue we should, would only risk British jobs and growth.”
Ed Balls, shadow chancellor, said in an interview with Sky News: “The cautious thing to do is to change course before it is too late, not to plough on with a reckless gamble which doesn’t seem to be working. The chancellor should start listening not just to me, but the IMF and the Federation of Small Businesses who have also called for temporary tax cuts if slow growth persists.

“Temporarily reversing the VAT rise, which is costing families with children £450 per year, would give our stalled economy the jump start it urgently needs and so help get the deficit down for the long term. The government also needs to get the banks lending to small businesses and use the funds raised from repeating the bank bonus tax to get young people off the dole and into work.

“After the global recession we’ve got to get our deficit down and that means tough decisions on tax and spending cuts. But it’s now increasingly clear that we need a more balanced deficit plan that puts jobs and growth first. We need a plan for the long-term future of our country which recognises you can’t get the deficit down in a sustainable way without strong growth and more people in work.”

TUC General Secretary Brendan Barber said in a statement: “It’s hurting, but it isn’t working. Ministers told us that deep rapid cuts would get the economy back on course and leave the private sector room to grow.

“But the treatment has turned out to be worse than the disease, and with the government borrowing more last month than they did a year ago they are not even tackling the deficit effectively.”