The Olympics helped the UK economy grow at its fastest pace in five years in the last quarter, taking the country out of double-dip recession, reports The Telegraph.
In the quarter to the end of September, the economy grew 0.8pc, the National Institute of Economic and Social Research estimated.
“Unless output turns down again, the recession is over,” NIESR said. However, the think tank cautioned that the underlying rate of growth was weaker, at close to 0.2pc or 0.3pc.
The headline number was flattered by the impact of earlier ticket sales to the Games, it said, as this spending is not banked in official figures until the event takes place. Recent growth was also given a one-off boost by the impact of people downing tools for the extra bank holiday to mark the Queen’s Jubilee, which fell in the previous quarter.
NIESR cautioned that the UK’s period of depression – where output remains below its previous peak – will continue for some time amid much slower growth in coming quarters.
“We do not expect output to pass its peak, in early 2008, until 2014,” it said. “The strength of the figure for the three months to September is largely an artefact of special events.”
None the less, the return to growth and likely boost to confidence will be welcomed by the Government, after the UK economy shrank over the previous three quarters.
The estimates come after the International Monetary Fund sharply revised down its forecasts for the UK economy over 2012 as a whole, from the 0.2pc growth it expected in July to a 0.4pc contraction. It expects the UK to grow 1.1pc next year.
The Chancellor faced more poor data on Tuesday as the trade deficit hit its second-highest level on record and manufacturing output fell.
The deficit in goods and services, the shortfall between exports and imports, swung to £4.2bn in August from £1.7bn in July, the Office for National Statistics (ONS) said. That was the widest since April’s record.
Monthly manufacturing figures were also weak, with output in the sector shrinking by 1.1pc between July and August, after a 3.2pc rise the previous month, the ONS said.
Alan Clarke, an economist at Scotiabank, said the problems in the eurozone, the UK’s main trading partner, mean “there is precious little reason why our exports should be flying out of ports”.