Reaction as GDP grows by 0.7% in third quarter

Today it was announced that GDP grew by 0.7 per cent in the third quarter of 2014 – and by 3.0 per cent compared to the same quarter a year ago.

This is slightly down from the 0.9 per cent increase in Q2 2014 on a Quarter-on-Quarter basis, although the fall of 0.2ppts is well within the usual volatility that we see in the quarterly figure.

It means the UK is now 3.4ppts above the pre-crisis peak (in Q1 2008), after the great recession shrank the economy by 6.0 per cent.

The growth is balanced, with all four major sectors of the economy showing uplift: Manufacturing (0.4%); Services (0.7%); Construction (0.8%); Agriculture (0.3%).

On an annual basis, for the second quarter in a row, the three largest sectors of the economy – Services, Manufacturing and Construction (making up 95.5% of the economy) – each grew by three percent or more. Prior to the last quarter, the last time all three sectors grew by three percent or more, on the year, was in Q1 (versus Q1 1999).

Chancellor of the Exchequer George Osborne said: “Today’s strong growth figures show that the UK continues to lead the pack in an increasingly uncertain global economy. With all the main sectors of the economy growing it’s clear that our recovery is broadly based. But the UK is not immune to weakness in the euro area and instability in global markets, so we face a critical moment for our economy.

“If we want to avoid a return to the chaos and instability of the past then we need to carry on working through our economic plan that is delivering stability and security.”

David Ralph, Chief Executive of D2N2, the Local Enterprise Partnership for Derbyshire and Nottinghamshire, said: “This year has seen continued signs of the economy moving in the right direction and, as a result, confidence has risen among businesses.

“There has been positive news this month with the extension of Regional Growth Fund (RGF) money to the D2N2 area, through the University of Derby securing almost £16.5m of Government funding to help grow firms in our area, now being made available.

“Our own RGF pot, which has been topped up by European Regional Development Fund money, continues to help local businesses grow through the Unlocking Investment for Growth programme.  Since launching last year, businesses from across Derbyshire and Nottinghamshire have seen the benefits, with the programme approving £3.2 million in grant funding which will create more than 300 jobs. 

“Further applications at an advanced stage are requesting in excess of £1.6m and expect to create an additional 200 jobs, with Chalice Medical in Worksop a recent announcement, with a near £500,000 grant from us helping to create 28 new jobs. This is the largest grant awarded to date from our grant programme.

“But while there continues to be positive signs in a growing economy, the recent EU slowdown and global issues mean we must remain vigilant as we move forward and nothing can ever be taken for granted.

“For D2N2 to be successful in driving economic growth, local businesses and stakeholders must engage with us. We have to continue to make strides in the right direction and while that is happening, our ambition has to be, and will be, to make sure we are exceeding our potential.”

Chris Hobson, the Chamber’s Head of Information and Representation, said: “Although GDP output for Q3 was down slightly on where it was in Q2 – mirroring the Chamber’s local findings – 0.7% is still a respectable return and shows there is still growth in the economy. 

“All the major sectors of the economy grew in Q3, which highlights how broad-based the recovery is and it was particularly pleasing to see the construction and industrial production sectors post a strong performance. 

“The slowdown does strengthen arguments to keep interest rates on hold for a while longer and there are concerns that the growth experienced this year hasn’t yet fed into the public finances – with borrowing around 10% higher this year than last. 

“The Government and the Bank of England must also be mindful of uncertainties in the global economy and the potential impact of EU demands for additional UK financial contributions, which are a consequence of the UK’s relative out-performance of other major European economies.”

STATE OF THE EAST MIDLANDS AT A GLANCE