Gross domestic product (GDP) rose 0.5 per cent in the first quarter of 2011, recovering from the 0.5 per cent contraction in the last three months of 2010.

Gross domestic product (GDP) rose 0.5 per cent in the first quarter of 2011, recovering from the 0.5 per cent contraction in the last three months of 2010.

GDP is now at the same level as it was in the third quarter of last year, according to the Office for National Statistics (ONS).

The largest contribution to growth in total services output in the first three months of 2011 was from business services and finance, up 1 per cent, compared with a 0.8 per cent decline in the previous quarter.

David Kern, chief economist at the British Chambers of Commerce, believes the economy’s overall performance is ‘mediocre’. However, he acknowledges that there are some ‘positive features’ among the figures published by the ONS, including the 1.1 per cent growth in manufacturing, which was the main contributor to an increase in total production output.

‘These figures were mixed and well below the OBR [Office for Budget Responsibility] prediction that the economy would grow by 0.8 per cent in the quarter. On the basis of these figures, we reiterate our forecast that in 2011 as a whole GDP is likely to grow by 1.4 per cent, much lower than the OBR’s expectation of a 1.7 per cent increase,’ Kern explains.

Jim Davison, region director in the South and East for EEF, the manufacturers’ organisation, comments, ‘While a double dip recession has been avoided, the first estimate for Q1 growth is unlikely to settle nerves about the health of the recovery as all sectors of the economy face continuing uncertainties – from government spending cuts and rising costs, to disruptions in global supply chains and euro-area instability.’