The first estimate of growth between April and June showed the
The chancellor said the prolonged downturn had left a deep mark on
"Now we owe it to hardworking taxpayers not to repeat the mistakes of the past and instead to continue with the plan that is delivering economic security and a brighter future for all."
The economy is now 0.2% bigger than it was in the first quarter of 2008, before the full force of the crisis hit. Growth in the second quarter was led by the services sector - including hotels, restaurants, tourism and the City - which accounts for around three-quarters of the economy and expanded by 1%. That was a stronger rate of growth for the services sector than the 0.8% achieved in the first quarter.
Other sectors fared less well: manufacturing output grew by 0.2% between April and June, sharply lower than the 1.5% increase in the previous quarter. The broader measure of industrial production - which includes mining and utilities - rose by 0.4%, following a 0.7% increase in the first quarter. The construction sector contracted, with a fall of 0.5%, and the agriculture sector also shrank, by 0.2%.
Critics of the government's austerity policies pointed out that
Labour said the benefits of growth were unevenly spread and most workers, after six years of below-inflation wage rises, were being left behind.
"But with GDP per head not set to recover for three more years and most people still seeing their living standards squeezed this is no time for complacent claims that the economy is fixed. Wages after inflation are down over pounds 1,600 a year since 2010, housebuilding under this government is at its lowest level since the 1920s, and business investment is lagging behind our competitors."
Most analysts were optimistic about the prospects for growth over the next couple of years, despite the threat of interest rate rises by the Bank of
Capital Economics said it was confident GDP growth would exceed the IMF forecast of 3.2% this year and have staying power with 3% growth rates in 2015 and 2016.
Business groups were more cautious about the prospects for growth.
"It is important that we work to increase the contribution of exports and investment if this recovery is to become truly sustainable. In order to support the businesses driving the recovery, the Bank of
Industrial production: +0.4%
Some 15% of the economy. Carmakers are buoyant but food processors and pharmaceutical firms less so. Water supply - which is often volatile - was also a drag on GDP growth after it contracted by 2.5%.
Represents 6% of the economy. Commercial builders are not having an easy time, with shopping centre and factory construction waning. Housebuilding has also cooled.
Some 78% of the economy. Transport, retail, distribution, communications and storage grew by more than 1%. Only below-par spending by government and other services of 0.2% dragged on growth.
The sector is so small - just under 1% of the economy - that its ups and downs have almost no impact on overall GDP. Growth was strong in 2013 but activity slowed this spring.
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