Despite George Osborne’s unprecedented austerity drive, state spending made a surprise positive contribution to UK GDP over the first quarter of 2012.
According to the Office for National Statistics, output from government services contributed 0.2% to growth over the first three months of the year.
Philip Shaw of Investec said: “If there is one area you’d expect to be soft, it would be anything with a government label attached to it.”
Andrew Goodwin of the Ernst & Young Item club described the figures as “an oddity”.
He said: “Part of it might be that government departments are able to drag more efficiency out of the workforce they have. That’s really the only way we can rationalise it.”
Yet this follows a run of positive contributions to total output from the state sector over the course of 2011.
Economists, however, doubt that this boost will endure, with 90 per cent of the Chancellor’s spending cuts still to be implemented.
The Office for Budget Responsibility has forecast that government expenditure will make no contribution to GDP growth through the course of 2012, before subtracting by 0.3% from annual output in 2013, 0.5% in 2013, and 0.6% in both 2015 and 2016.
The increased spending from Whitehall contrasts with a 0.1% slide in output for business services and financial firms.
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