One off events this summer such as the Olympics and the Diamond Jubilee have distorted the underlying picture of the UK economy, analysts have said.
The UK economy grew 1% in the third quarter of this year – but the majority of that growth was spurred by the Olympics.
Tickets alone accounted for 0.2% of the increase in GDP, with associated sectors such as hotels, food and beverage services, arts and entertainment and the wider employment market showing some benefit from the Games. Estimates range that 0.5%-0.7% was generated by this single event.
Retail “showed some strength” during the three months from July-September, but the well documented impact of Games attendance on shoppers meant there was “little evidence of any significant Olympic effect”.
Although this is the first quarter since Q3 2011 to have shown growth – and the fastest climb in five years – some experts have warned that it may be an anomaly given the impact of the Olympics and of deferred spend from the Jubilee weekend.
Amit Kara of UBS told the Daily Telegraph: “It’s good news that we wiped out all the output loss from the previous three quarters but it’s obvious that the bounceback is because of one-factors and as such, the underlying story is still very weak.”
Richard Barwell of RBS added: “If you worked out the impact of the Jubilee and the Olympics on GDP, you’d get this obvious zig-zag effect, which is exactly what’s happened. So on that basis I’m not surprised by the numbers.
“Big picture, it’s a very strong number but if you put it next to the very weak number from the previous quarter you average out to a little bit of growth. The story actually is unchanged, it’s just some headline volatility.”
James Knightley, analyst at ING, added: “We are hopeful that positive GDP growth will continue in coming quarters, although a repeat of today’s 1% growth rate is highly unlikely anytime soon.”