Coalition ministers say growth figures showing economy grew by 1.9 per cent in 2013 mean that the Government's economic plan is working
New figures showing that the economy is growing at the fastest rate since the financial crisis prove Britain is on the right course, coalition ministers have declared.
George Osborne said the numbers were a “boost for the economic security of hardworking people” with manufacturing growing fastest of all.
“It is more evidence that our long term economic plan is working," the Chancellor added.
Nick Clegg said the economy is moving in the “right direction” with unemployment down and growth up. However the deputy Prime Minister also warned that future growth must be achieved “fairly” with investment in jobs outside London.
Official figures released today show the economy grew by 0.7 per cent in the last quarter of 2013. Growth last year was 1.9 per cent in all, the biggest annual expansion since 2007, when the financial crisis began.
The UK economy is still smaller than it was when the crisis struck – and many households are poorer. But figures suggest that consumers and businesses alike are increasingly confident about the future.
Danny Alexander, the Chief Secretary to the Treasury, said the figures were further evidence that “the recovery is becoming established” with 2013 becoming the first year since 2007 to see economic growth in all four quarters.
However Ed Balls, the shadow chancellor, said that the growth figures are welcome and "long overdue" but warned that the recovery is not "built to last" as business investment is "weak" and construction output down.
Announcing the figures last night Vince Cable, the Business Secretary said the figures represented a “real recovery” with business leaders speaking of a "real upsurge.”
However, he also warned that there were significant risks to a sustained recovery, particularly the housing market.
In a speech to the Royal Economics Society at the Bank of England Mr Cable said: “There has been a positive change in economic sentiment over the last six months or so. A real recovery is taking place,” Mr Cable said on Monday night.
He added: “Despite a fall in real earnings, consumers have had the confidence to start spending again – dipping into their savings held for a rainy day and making use of rising house prices, at least in London and the South East, to borrow more easily,” he said. Improved jobs prospects have also “probably” helped boost the economy.
Joe Grice, chief economist at the Office for National Statistics said: ““We have now seen four successive quarters of significant growth and the economy does seem to be improving more consistently.
“Today's estimate suggests over four fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3 per cent below the pre-recession peak.”
The CBI, Britain’s biggest business lobby, also said that more British companies are seeing their sales grow than at any time since the crisis began.
“A picture is unfolding of a real upsurge in output across much of the UK economy,” said Katja Hall, the CBI’s chief policy director.
“Many firms in many sectors are feeling brighter about their prospects than they have for a long time, showing the recovery is gaining traction. While some risks remain, we expect the economy to continue to strengthen through 2014.”
John Longworth, the director general of the British Chambers of Commerce said that businesses across Britain are growing more "bullish" about their prospects.
He said: "Many companies are accelerating their pace for the first time in years, with others saying they're set to do the same. Our surveys now consistently show business confidence levels not seen for decades."
The figures from the Office for National Statistics and the CBI data are the latest signs that the UK economy is on the rebound.
Last week, the International Monetary Fund upgraded its forecast for UK growth by the biggest margin of any economy. It now expects the UK to grow by 2.4pc in 2014, in line with the Office for Budget Responsibility, the Government’s fiscal watchdog.
Conservative and Liberal Democrat ministers alike are keen to take credit for the recovery, claiming it vindicates Coalition economic policies.
However, there are still fears that the recovery will not last because it is too heavily reliant on consumer spending and rising house prices, while business investment remains subdued.
“Despite these encouraging signs, the shape of the recovery so far has not been all we might have hoped for,” Mr Cable said.
Echoing Sir Winston Churchill in 1942, he suggested that the UK economy is now at “the end of the beginning rather than the beginning of the end.”
The ONS figures show that output in the service sector – which makes up more than three quarters of GDP – rose by 0.8 per cent in the fourth quarter, maintaining its pace from the previous months.
But industrial output growth slowed to 0.7 percent from 0.8 per cent and construction – which accounts for less than 8 percent of GDP – fell by 0.3 per cent.
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