Economy grows 1.9% but business urges caution as construction takes a downturn

 
28 January 2014
WEST END FINAL

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Business groups today called for action to ensure a lasting recovery, after figures revealed the economy grew 1.9 per cent last year — but construction took a sharp downturn in the autumn.

They sounded a cautionary note as it emerged growth was twice as fast as predicted at the start of the year.

Chancellor George Osborne declared signs of “a brighter economic future”, while David Cameron tweeted the GDP figures with delight.

It contrasted with more humiliation on the economic front for beleaguered French president Francois Hollande. France’s unemployment rate soared to a record new high of more than 3.3 million, despite his promises to bring it down.

In Britain, the City of London appeared yet again to be the biggest driver of economic recovery. Business services and finance were the fastest growing of the major economic sectors, up by 1.2 per cent in the fourth quarter of 2013.

But there was disappointment that the UK’s quarterly growth rate slowed in the final three months of the year, to 0.7 per cent from 0.8 per cent, mainly because of a 0.3 per cent shrinkage of the construction sector.

Overall Britain is growing faster than at any time since 2007 when growth peaked at 3.4 per cent. In 2012, growth was only 0.3 per cent.

Joe Grice, chief economic adviser 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.”

Mr Osborne said the numbers were a “boost for the economic security of hard-working people” and highlighted the success of manufacturing companies.

Mr Cameron tweeted: “The GDP figures are another sign our long-term economic plan is working — more growth means more jobs, security and opportunities for people.”

But business leaders said more work was still needed. John Longworth, director general of the British Chambers of Commerce, said businesses were enjoying “confidence levels not seen for decades”.

However he added: “More must be done to shore up the foundations of this recovery if it is to be a lasting one.” He also called for more action on training, transport and trade support.

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