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UK economy grows by 0.5 percent

by Scott Bicheno on 27 April 2011, 10:34

Tags: General Business

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We’ll settle for that

The Office of National Statistics has released its figures for the UK's Q1 GDP, and the good news is they're back in the black after a shock contraction the previous quarter. Two consecutive quarters of negative GDP define a recession, so talk of a double-dip can recede, for now.

GDP grow by 0.5 percent in Q1, having shrunk by the same amount in the previous quarter. While there was relief at the absence of another shock, initial reaction was to point out that the recovery remains weak, and flat.

Q4 2010 is viewed as a bit of an aberration due to the snow in December, which the UK showed its usual complete inability to cope with. With everyone staying at home rather than face Snowmageddon, the services and logistics sectors were hard hit. They rebounded strongly in Q1, more than compensating for the continued decline of the construction sector.

But there are still murmurs of stagflation abounding, as the continued anaemic growth makes it less likely interest rates will be raised in the near future. Inflation remains well above the two percent target and there are few tools available to boost the economy. With government austerity measures starting to kick-in, you have to wonder where the growth is going to come from, especially since we were hardly setting the world on fire before the recession.

 

 

 



HEXUS Forums :: 7 Comments

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More Tax on fuel, those motorists haven't been hammered hard enough!!!

That's their answer to everything isn't it!?
Well no actually, their answer was to raise VAT and hammer everyone - between that and inflation. So not just the motor junkies affected :)
Don't think we're out of the woods yet. Wouldn't be surprised if we see a very flat year, there's still a fair amount of pain to come for the public sector workers as their cuts really haven't kicked in yet.
As usual, the devil is in the caveats, and the detail.

One caveat …. no single quarter can be taken to mean much. Last quarter had reasons for being exceptionally poor. Some detail …. it isn't just the overall figures that matter, but the breakdown. Exclude construction from those growth figures and the picture looks much rosier, especially given that we're supposed ti be rebalancing the economy. And it's hardly surprising that construction is poor - you only have the look at the difficulty of getting mortgages these days. A better question would be whether a rationalisation of mortgage finance and the construction sector is actually a bad thing?

Be VERY sceptical when you hear politicians talking about these figures, because if there's one thing you can be sure of it's that they'll pick the way to present the figures that best makes the party-political point they want to make. Lies, damned lies and statistics. ;) :D
'[GSV
Myocardial;2072570']Don't think we're out of the woods yet. Wouldn't be surprised if we see a very flat year, there's still a fair amount of pain to come for the public sector workers as their cuts really haven't kicked in yet.

Completely agree, still interest rate rises hanging over everyone. Then there is China exporting their own inflation, rising standard of living and wages rises, all means more expensive goods and less for your £. A lot of people I know are managing to get by on the low mortgage interest rates. Too many people borrowed far too much in the crazy credit years, I think they'll be paying for it in more ways than one in the next couple of years…