LONDON (TIP): Britain’s economy dodged a return to recession and grew faster than expected in the first three months of this year, providing some political relief for a government under fire over its austerity drive. The Office for National Statistics said Britain’s gross domestic product rose 0.3 percent in the first quarter, well above forecasts for a 0.1 percent rise. The economy shrank 0.3 percent quarter-on-quarter in late 2012, so a second contraction would have put Britain into its third recession in less than five years. Year-on-year, the latest GDP reading was 0.6 percent higher, the strongest rise since the end of 2011.
Finance minister George Osborne said on Thursday’s data was encouraging and vowed to stay the course on fixing Britain’s budget problems. “We all know there are no easy answers to problems built up over many years, and I can’t promise the road ahead will always be smooth, but by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future,” he said in a statement. Sterling hit its highest level in two months against the dollar after the data and British government bond prices fell. Britain’s preliminary GDP figures are one of the first for a major advanced economy, and based mostly on estimated data, but it would be rare for a reading this high to be revised down into negative territory. The rise was driven by strong services sector growth and a bounce-back in North Sea oil and gas output. Politically, a slip back into recession would have been difficult for the government in general and Osborne in particular, coming just days after ratings agency Fitch.