–Q1 GDP Revised Up to +0.3% q/q; -0.2% y/y
–Q1 GDP Revision Bang In-Line With Median Forecast
LONDON (MNI) – UK economic growth was revised up slightly in the
first quarter, amid signs of increasing price pressures, figures
released by National Statistics Tuesday showed.
Gross Domestic Product rose 0.3% on the quarter in Q1 and was down
0.2% on the year, compared with the initially estimated rise of 0.2% on
the quarter and fall of 0.3% on the year. The upward revision was
in-line with the median forecast from City economists.
Stronger industrial production, now estimated at 1.2% on the
quarter was behind the upward revision, while services growth remained
weak at just 0.2% on the quarter.
New data released this month on the expenditure side of the economy
showed that household spending was flat on the quarter, the weakest
since Q2 2009, while net trade subtracted 0.4 percentage point from
quarterly GDP growth.
Driving the economy in the first quarter was a 1.5% rise in gross
fixed capital formation (investment), the largest increase since Q3 2009
while government spending increased by 0.5% on the quarter.
In spite of the upward revision there will be concerns over what is
going to drive growth moving ahead.
Government spending and investment will suffer directly at
the hands of the substantial public spending cuts ahead while household
spending will continue to be held back by high levels of indebtedness
and growing joblessness.
Analysts and the Bank of England have been expecting the external
sector to start adding to growth following the weakness of sterling in
recent months but this was not apparent in Q1 given the drag from net
trade.
Meanwhile, as fears over growing inflationary pressures mount,
today’s report showed the GDP deflator, the widest measure of inflation
in the economy, rising to 3.6% on the year, up from 1.4% in Q4, the
highest since Q3 2006.
–London newsroom: 44 20 7634 1655; e-mail:drobinson@marketnews.com
[TOPICS: MABDS$,M$B$$$,MT$$$$]