British economy strikes gold with Olympic boost
Big sporting events such as the Ryder Cup or the World Cup rarely deliver the major economic boost that is anticipated by the host country.
But the UK broke free of a nine-month recession in the third quarter, helped by the 2012 Olympic Summer Games, the Office for National Statistics reported.
The UK's double-dip recession ended after the economy grew 1pc between the second and third quarters, much more than economists had expected.
The economy had shrunk for three consecutive quarters in 2008, righted itself, then sputtered along for a time before returning to recession in the last quarter of 2011.
Yesterday's data showed that the UK's economy was back to where it started in the third quarter of last year.
While our biggest trading partner has many reasons to be cheered by this good news, it does come with a strong health warning.
The data was bolstered by one-time factors, and therefore there is a danger that the economy could falter again, especially if conditions in the global economy or eurozone worsen.
The near-term outlook for the British economy remains risky. Output in Britain's services sector -- which makes up more than three-quarters of GDP -- rose by 1.3pc in the third quarter after a 0.1pc drop in the second quarter. Industrial output was 1.1pc higher, the strongest rise since the second quarter of 2010.
Construction -- which accounts for less than 7pc of GDP -- contracted by 2.5pc.
Underlying the weak growth is a chronic lack of demand. The British government is cutting back. Key export markets in the eurozone are flailing. And consumers have suffered a massive squeeze on their incomes.
In other words, no one is buying -- not the state, not the foreigners and not the shoppers.
British companies have £750bn (€934bn) of cash to invest, but they aren't spending either because they don't want to splash out a fortune on some new machinery only to discover that nobody wants what they are selling.
In effect, the economy, somewhat similar to our own, is in a state of paralysis as it waits for things to improve.
That said, the strong rise in gross domestic product will come as a relief to the coalition government, whose austerity programme has come in for fierce criticism as the economy has faltered.
The statistical office said the Olympic and Paralympic events had probably lifted growth about 0.2 percentage points through ticket sales, all of which were accounted for in the third quarter, even though tickets were being sold since 2011. Of course, employment and other parts of the economy were also thought to have been helped by the Olympics. But despite the boost, the office of statistics said it was "not possible to quantify the overall impact of the Olympics, and indeed some of the activity may have displaced other activity".
But regardless of how they crunch the numbers, the biggest sporting event in the world won another gold for the UK economy and its coalition government yesterday.