Figures released by the Official for National Statistics (ONS) this morning show that growth in the UK economy slowed to 0.2%  in the period up to June 30th.

It had been speculated that today's GDP figures might signal a contraction, although a figure of 0.2% still marks a drop from the previous quarter's 0.5%. It also makes the Office for Budget Responsibility's (OBR) 2011 growth forecast of 1.7% look increasingly optimistic.

Chancellor George Osborne was quick to point out this morning that, however modest, the UK economy is still growing and has reiterated his commitment to the coalition government's austerity program.

"The positive news is that the British economy is continuing to grow and is creating jobs," the Chancellor said in a statement.

He also contrasted Britain's deficit reduction plan with turmoil in the Eurozone and wranglings over the debt ceiling in the United States arguing, "at a time of real international instability we are a safe haven in the storm."

"Our economy is stable at this time because this government has taken the difficult decisions to get to grips with Britain's debts. Abandoning that now, as some argue we should, would only risk British jobs and growth," he said.

That view was supported by Business Secretary Vince Cable, who argued that the government must stay the course.

"The Government has made it very clear that we have got a very determined plan which we are sticking to to eliminate the structural deficit over the period of the parliament," he said.

Cable added: "there is no need for a plan B. We have to stick to the deficit reduction commitments"

The extra April bank holiday to celebrate the Royal Wedding, as well as the after effects of the Japanese earthquake, have been blamed for this quarter's modest growth, and the ONS has said that without these one-off factors growth would have been 0.7%.

Labour claim that the economy is simply on the wrong track. Shadow Chancellor Ed Balls has repeated his call for the government to reverse the raising of VAT to 20% and called on the Treasury to do more to promote growth.

"Our economy has flat-lined in the last six months", he said. "It's not growing. That's why the chancellor is having to admit that borrowing is going to be higher than he expected."

"In the end, unless you've got more people in work paying taxes, the economy growing, it is very hard to get these deficits down," he added.

Tags: Austerity, Balls, Cable, Cuts, Deficit, Economics, GDP, Growth, ONS, Osborne