MercoPress. South Atlantic News Agency

Olympics and Diamond Jubilee help UK economy return to growth in third quarter

Olympic ticket sales alone increased GDP growth by 0.2 percentage points

Spurred by the Olympics the UK economy returned to growth at its fastest pace in five years, official figures showed on Thursday. GDP 1% in the third quarter of the year, the Office for National Statistics said. This ended three consecutive quarters of declining output.

City experts had expected a rise of 0.6%. The actual figure is the biggest increase since the third quarter of 2007.

The largest contribution to the surge came from the powerhouse services sector, which makes up around 75% of the total economy and grew at 1.3%, following a 0.1% drop in the previous quarter.

But the bounce-back was largely driven by one-off factors, the ONS warned, such as clawed-back activity lost to the extra bank holiday for the Queen's Diamond Jubilee and a lift from the Olympics. The figures are preliminary estimates and subject to revision.

The figures come amid warnings from economists that the UK is far from out of the economic woods and can expect growth to slow in subsequent quarters. But Britain's Chancellor George Osborne said the figures show that the country is ''on the right track“.

The third quarter had one more working days than the previous quarter, due to the Queen's Diamond Jubilee, which would have affected the estimate, the ONS said.

The London 2012 Olympics and Paralympic Games also impacted economic activity in the third quarter, the ONS added.

Olympic ticket sales alone increased GDP growth in the period by 0.2 percentage points, while the event is likely to have lifted a range of other services including employment agencies, creative arts, office administration, accommodation and food and beverages.

Industrial production increased by 1.1% between July and September, the ONS said, following a 0.7% decline in the previous quarter. Manufacturing contributed the most to the increase in industrial production, followed by water and sewerage industries.

The construction sector remained under pressure in the third quarter, however, shrinking 2.5%, following a 3% drop in the previous quarter.

Within the services sector, the index of distribution, hotels and restaurants rose 1.6%, transport sector grew 0.8%, business services and finance increased 1% and government services lifted 1.6%.

The Chancellor said the UK still faced ”many economic challenges at home and abroad“. ”By continuing to take the tough decisions needed to deal with our debts and equip our economy for the global race we're in, this Government is laying the foundations for lasting prosperity,' he added.