Britain’s economic recovery picked up further speed in the first quarter, official data showed on Tuesday, boosting the coalition government one year before the country’s next general election.
The economy has expanded for five successive quarters, but has struggled to return to the levels of output witnessed before the 2008 global financial crisis.
Nevertheless it is outperforming other major economies, helped by state austerity, a pick-up in bank lending, and policies by the government and the Bank of England that have helped to support the country’s employment and housing markets.
Gross domestic product — a measure of all goods and services produced by a nation’s economy — grew by 0.8 percent in the first three months of 2014 compared with the fourth quarter of last year, the Office for National Statistics (ONS) said in a preliminary estimate on Tuesday that could be revised.
That was higher than the 0.7-percent expansion experienced in the final three months of 2013, but undershot market expectations for GDP growth of 0.9 percent.
The ONS added that GDP was 3.1-percent higher in the first quarter compared with the equivalent period of 2013. That was the best year-on-year growth rate since the fourth quarter of 2007.
Finance minister George Osborne, a member of the Conservative party that heads a coalition government with the Liberal Democrats, hailed Tuesday’s data but vowed to maintain his austerity policies that are aimed at slashing Britain’s huge deficit.
The coalition has insisted upon deep spending cuts to try and eliminate the deficit inherited from the opposition Labour party in 2010.
– No turning back: Osborne –
Speaking after the GDP figures were released, Osborne said the government had to carry on working through its long term austerity plans.
“The biggest risk to economic security would be abandoning the plan that is laying those foundations” of recovery, he added in a statement.
Osborne last month said that Britain’s economy was expected to grow faster in the run-up to an election due in mid-2015.
Analysts said Britain was in a solid phase of recovery.
“Today’s GDP report wholly supports our view that the economic recovery is strengthening,” said Daniel Vernazza, economist at UniCredit Research.
“The economy is now just 0.6 percent smaller than its pre-crisis peak hit in the first quarter of 2008.”
The ONS said economic activity was bolstered in the first quarter by the services sector, which grew 0.9 percent in the first quarter of 2014. Industrial production rose 0.8 percent and construction output increased 0.3 percent.
Manufacturing meanwhile soared 1.3 percent — its strongest quarter for nearly four years.
The nation’s economy had expanded by 1.7 percent last year, which was the strongest growth rate since before the notorious global financial crisis.
Last month meanwhile, the International Monetary Fund forecast that the economy would grow by 2.9 percent this year.
That puts Britain ahead of the United States, Germany and Canada, and marked an upgrade from the previous IMF growth estimate of 2.4 percent.
The IMF had previously warned that Osborne’s austerity policies were “playing with fire” and risked endangering the recovery.