Talk of a double-dip recession had no basis in fact says Treasury – GDP figures show recovery is steady.

George Osborne has said that better-than-expected UK economic performance figures show the recovery is "steady".

The Office for National Statistics (ONS) suggests the economy grew at 0.8% between July and September - twice the rate expected by many analysts.

The chancellor said this would improve confidence, with Treasury sources adding it showed the risk of a "double-dip" recession was being overplayed. But Labour said the speed of spending cuts could damage the recovery.

The latest gross domestic product (GDP) figure follows 1.2% growth in the second quarter of the year, and is double the 0.4% expected by analysts. But the data is only a first estimate, and may be revised.

The Cabinet, which met for 45 minutes earlier on Tuesday, was dominated by discussion of the GDP figures and the government's growth strategy, Downing Street said.

The economic situation was still "relatively choppy," the prime minister's official spokesman said, but the growth figure "is something we can take confidence from".

Mr Osborne, as chairman of the cabinet's economic affairs committee, would now be leading a "ruthless focus on growth" by going through each government department in turn to push for greater efficiencies and deregulation and "clear any bottlenecks," the spokesman added.

'Broadly based'

Commenting on Tuesday's economic data, Mr Osborne said: "Today's figures show the economy continuing to grow, at double the rate the market expected and the fastest rate for the third quarter since 1999.

"Just like the second quarter, the growth is broadly based and the lion's share is coming from the private sector.

"The ONS believe that the underlying growth in the third quarter was 'broadly similar' to the strong second quarter. This gives me confidence that although global economic conditions remain choppy, a steady recovery is under way."

But, for Labour, shadow chancellor Alan Johnson said the figures showed that growth has slowed in third quarter of this year.

"They also show that momentum remains from Labour's support for the economy - especially the construction sector.

"The risk going forward is that the government has a plan to cut one million jobs, but no plan to support the private sector in replacing them.

"Yes, the deficit needs to be reduced - but it needs to be at a pace that the private sector can manage."

Treasury sources told the BBC the GDP figures were welcome news, adding that talk of a double-dip recession had no basis in fact.

Source: bbc.co.uk 12.01pm 26.10.10