A jump following lost output during the Queen’s Diamond Jubilee, combined with the direct impact of Olympic ticket sales, would add 0.7 per cent to GDP, analysts predicted, but some were pessimistic about underlying output, and forecast rises of less than 0.7 per cent in the overall figure.
“Temporary factors should have added at least 0.7 per cent or so to GDP,” said Vicky Redwood at Capital Economics. “But... surveys point to broadly flat underlying output – we have pencilled in a 0.6 per cent rise.”
Michael Saunders and Ann O’Kelly at Citi were even gloomier, expecting output growth to “markedly undershoot” early forecasts, by growing 0.4 per cent between the second and third quarters.
“Allowing for the possibility that non-Olympics activity was disrupted during the Olympics, the underlying path for the economy in the third quarter probably was roughly flat,” Kelly and Saunders said.
They point out that rosy early expectations are rarely met: “Over the period from the third quarter of 2008 to the second quarter of 2012 quarter-on-quarter GDP growth has undershot the pre-release consensus in 11 out of 16 quarters – with an average undershoot of 0.2 percentage points per quarter.”
Though Tobias Blattner and Chris Scicluna at Daiwa Capital had a more optimistic outlook, forecasting 0.7 per cent, this more hopeful estimate was only in line with the one-off rebounding figures.
Any expansion will provide a boost to beleaguered chancellor George Osborne, who has been criticised from across the spectrum for failing to generate growth. Labour and recently the IMF have blamed austerity, while backbenchers have called for greater supply-side reform.