UK out of recession with Olympic help

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UK out of recession with Olympic help

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Britain rebounded strongly from recession in the third quarter.

GDP growth – up one percent – was the strongest in five years, partly thanks to ticket sales and other spending from the London Olympics.

Finance minister George Osborne said the figures vindicated the government’s economic policies, coming as they do after falls in UK unemployment and inflation last week.

The British economy returned to growth after three consecutive quarters of contraction which makes another stimulus injection of cash from the UK central bank less likely.

GDP has expanded by 0.3 percent so far this year, but that is still 3.1 percent below its peak in early 2008 and economists warned underlying growth remains weak.

The UK has not fully recovered the output lost during the 2008-2009 slump that has left many Britons worse off and the economy slipped back into recession at the end of last year.

Most economists agree that a sustained recovery is far from certain after business surveys have indicated a weak start to the final quarter of the year and one-off factors – like the London Olympics and a rebound from an extra public holiday in the previous quarter – were the main drivers behind the strong bounce in Q3.

If there were a more sustainable recovery that could reduce the pressure on the government to ease its austerity plan of tax hikes and spending cuts aimed at erasing a huge budget deficit.

Opposition Labour finance spokesman Ed Balls meanwhile kept up his call for a change of tack. “The complacent thing to do now is simply to wait and hope things will get better,” he said.