UK on road to recovery, avoids triple-dip recession: OECD

The UK has avoided a triple-dip recession and is finally on the road to recovery, says the Organisation for Economic Cooperation and Development (OECD)

The OECD said yesterday that the UK economy registered an annual growth rate of 0.5 per cent in the first quarter of 2013, which was just over 0.1 per cent on a quarterly basis, enough to avoid another recession following the 0.3 per cent slump in the final three months of 2012.

According to figures published by the Office for National Statistics (ONS) which confirmed the development, the economy shrank by 0.3 per cent in the final quarter of 2012.

According to Pier Carlo Padoan, deputy general secretary of the OECD and its chief economist, the situation was still fragile but improvements were beginning to be seen.

The Paris-based think tank said growth would pick up to an annual rate of 1.4 per cent in the second quarter of the year as the UK emerged from the economic doldrums.

This came with official UK figures showing the crucial services sector grew by 0.3 per cent in January - its strongest rate of expansion in five months.

According to the ONS, output in the sector, which made up three-quarters of the economy and included pubs, stock brokers and hairdressers, was 0.8 per cent higher than a year earlier.

The growth projections of the Paris-based think-tank compared well to the UK economy's 1.2 per cent contraction in the final three months of last year, as the OECD used annualised rather than quarterly growth rates. The UK economy, on a quarterly basis, shrank by 0.3 per cent at the end of last year.

The echo of the more upbeat outlook was heard in the US, where officials reported that the world's biggest economy logged a growth higher than thought in the fourth quarter of last year, at an annual rate of 0.4 per cent, up from an initial 0.1 per cent estimate.

The news sent a cheer in Wall Street as the S&P 500 share index rose to fresh highs, hitting 1,567 points at one point, above its 2007 all-time record.

A further boost to UK growth hopes came as, separately, the ONS said the services sector expanded by 0.3 per cent in January against the previous month, when output dropped 0.4 per cent.

The performance from service businesses, accounting for three quarters of the UK's economy, represented their strongest growth rate since August last year, when businesses received a boot from the Olympic Games.