26th July 2011
On the bright side or at least the brighter side – the ONS says that without some unanticipated events such as the Japanese earthquake growth could have been 0.7 per cent though once again hardly an excuse to start the champagne corks popping.
Ian McCafferty, the CBI's Chief Economic Adviser, said: "This is the third consecutive quarter in which special factors, such as the winter weather, unseasonal North Sea maintenance, the Japanese tsunami and an extra bank holiday, have made interpretation of the data more difficult and have depressed economic activity over the short term. There is likely to be some bounce back over the autumn, but it's clear that the underlying economic recovery remains fragile and difficult."
BBC economics correspondent Stephanie Flanders gives her assessment – that the numbers would have been disappointing if expectations had not been so low. She also compares the UK unfavourably with the growth prospects for the US, France and Germany while noting that all these countries have been affected by global issues too.
She writes: "On average, the latest independent forecasts have the UK growing by 1.3% in 2011, significantly below the official Office for Budget Responsibility forecast of 1.7% – and there is not much in the second quarter ONS figures to suggest those predictions need to be revised up.
"That compares with a consensus forecast 2.5% growth for the US, 3.4% for Germany and 2% for France which had a much shallower recession than Britain did.
"Those economies have also had "one-off factors" like the Japanese tsunami to contend with (though admittedly, they were deprived of the pleasure – and accompanying distortions – of a royal wedding."
Mindful Money's own economics blogger Shaun Richards expresses his surprise that in recent quarters bad weather and now record good weather in April is partly blamed for the lower figures. None of this significantly changes his view that the UK is experiencing stagflation nor that another quantative easing round could stoke it further.
On the Guardian, economics editor Larry Elliott suggests we may be looking at a lost decade as Japan did until recently as a property boom burst.
Back at the Telegraph some economists fear that without a substantial bounce in the third quarter the UK's triple A credit rating is at risk. The paper quotes Stephen Lewis, chief economist at Monument Securities, saying: "If the third quarter is poor as well, I fear we will be put on negative watch."
Then again other economists warn that any divergence from cuts would also undermine our rating.
Here the Daily Mail's take is that the Government's economic policies remain under pressure.
FT Alphaville takes a close look at the reactions on various measures and deems the 0.2 increase a ‘pass'.
It also notes that both David Cameron and Vince Cable suggest no change in policy.
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