MercoPress. South Atlantic News Agency

UK spring surprise: economy expands 0.3% in first quarter

“Today's figures are an encouraging sign the economy is healing” said Finance minister George Osborne

Britain has avoided falling into its third recession since the 2008 global financial crisis, after the economy grew by a better-than-expected 0.3% in the first quarter of 2013 compared with the final three months of last year, official data showed on Thursday.

In a major boost to Prime Minister David Cameron's coalition government, the Office for National Statistics revealed that British GDP expanded by 0.3% in the January-March period.

That marked a rebound from the fourth quarter of 2012, when the economy shrank by 0.3%, the ONS added in a statement.

The technical definition of recession is two successive quarters of contracting economic activity.

“Today's figures are an encouraging sign the economy is healing,” said finance minister George Osborne. “Despite a tough economic backdrop, we are making progress” the Chancellor of the Exchequer added in a statement.

In reaction to the impressive growth, the British pound rallied to a three-week high against the Euro and a two-month peak against the dollar.

The positive GDP figure comes after Fitch last week stripped Britain of its top triple-A rating, moving it down one notch to 'AA+' amid fears that the government's austerity program was hurting economic recovery.

The downgrade comes two months after rival ratings agency Moody's also stripped Britain of a triple-A debt rating, saying government debt was still mounting and that growth was too weak to reverse the trend before 2016. Downgrades can cause a country to pay higher interest for its debt.

The ONS added that Britain's economy expanded by 0.6 percent in the January-March period compared with the first quarter of 2012. Growth was driven by a solid services sector, which grew by 0.6% in the first quarter thanks to strong performance by the retail, hotel and restaurant industries. The production sector expanded 0.2%, while the construction industry slid 2.5%.