UK economy grew by 0.1% in first quarter

The latest estimates from the National Institute of Economic Research (NIESR) have revealed that the UK GDP expanded into a marginal growth figure of 0.1% in the three months ending in March, suggesting that Britain’s economy is making a gradual upturn.

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The figure from the first quarter of the year comes after a growth rate of 0.1% in the three months to February, renewing economists’ hopes that UK will avoid a triple-dip recession.

“With the UK’s largest oil and gas field coming back on-stream in March, likely leading to another positive gain in output, we are more optimistic that the UK can avoid its third technical recession,” said James Knightley, an economist at ING.

NIESR has maintained its forecasts that the UK will expand by a figure of 0.7% in 2013, and 1.5% in 2014.

But while the UK may be out of a recession, according to the definition outlined by the NIESR, Britain’s economy is set to be mired in a “depression” for years to come.

According to the Institute a “depression” is defined as a period when economic output is depressed below its previous peak, and it looks the UK’s economy could stay this way for the next two years.

Last month the think-tank predicted that the UK’s economy will not return to the peak in early 2008 until 2015.

NIESR, run by former government economist Jonathan Portes, said the recovery would be hinged on increased spending by consumers and private companies, as well as export sales.

“It remains our view that such a recovery would best be supported by a significant increase in public sector net investment, with looser fiscal policy in the short term while demand remains weak, and radical reform of the financial sector to support lending to the real economy,” the think tank said.

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