ONS revises UK economy up for 2012

Adding further bullish sentiment, the Office for National Statistics (ONS) announced in late February that the UK economy grew by 0.2% in 2012. This is a modest improvement from their previous estimate of zero growth. However, they left their Q4 (2012) assessment at -0.3%, which is unchanged from their previous estimate.

The revised annual figures reflect an improvement of 0.1% in the contraction of Q1 and an improvement from 0.9% growth in Q3 to 1.0%, with the benefits seen from the London Olympics being the main factor here, as all ticket sales were statistically deemed to have taken place in Q3.

Whilst the final Q4 figures disappointingly remained at -0.3%, there were some interesting differences in the performance of various business sectors.

The construction sector had their output revised upwards to 0.9% from the previous estimate of 0.3%, whilst the production sector had their performance adjusted down from a contraction of 1.8% to 1.9% and the service sector, which is responsible for 75% of the UK economy, saw their performance revised down to a contraction of 0.1%.

At the same time the ONS announced expenditure figures for Q4 2012, with consumer spending up 0.2%, but imports down 1.2% and exports down 1.5%. Business investment was also reported to have fallen by 0.4%. Commenting on this report, the Director General of the British Chambers of Commerce, John Longworth, said: “These figures, coupled with the recent downgrade of the UK’s credit rating, confirm that action must be taken quickly to get the economy growing again.

“The Chancellor should seize the opportunity in next month’s Budget to be radical, and introduce measures that create an environment of enterprise, stimulate export growth, kick-start infrastructure projects and create a structure of business finance which supports growing companies.”

As alluded to by Mr Longworth, Moody’s, the rating agency, downgraded the UK from its long-standing AAA rating one notch to AA1, stating that growth in the UK would “remain sluggish over the next few years.”