United Kingdom: GDP Grew By 0.5% In Q127 April, 2011, 17:03. Posted by Zarathustra
Tags: Economy, GDP, United Kingdom
The United Kingdom’s real GDP grew by 0.5% in the first quarter of 2011 compared to the last quarter of 2010. On an year on year basis, real GDP grew by 1.8%. The market was expecting 0.5% growth qoq, and 1.8% yoy, thus the actual numbers came right in-line with the consensus.
Some of the numbers are not very encouraging. For instance, construction output fell 4.7% in Q1 2011 vs. 2.3% in Q4 of 2010. The growth is also lower than the OBR’s forecast of 0.8%. Besides that, other parts of the economy recovered from the shocking contraction in the Q4 of 2010, which was largely due to heavy snow.
Source: Office For National Statistics
The coalition government has for months being questioned by the opposition on their growth strategy and whether it is really right to cut spending in such a time when the economy is weak. Although this latest figure shows that the country has returned to growth, it is hardly a number to cheer about. The coalition government will probably continue to see attack from the opposition (including Gordon Brown, although I am not sure how the man which got Britain into the mess should be listened to).
It is uncertain if the Bank of England hawkish camp will gain an upper hand sooner rather than later. Three of the Monetary Policy Committee members have been consistently voting for rate hikes in recent meetings (vs. 6 voted for keeping the Bank rate at 0.5%). At the moment, I guess they will still hold steady.
Meanwhile, the Pound Sterling surged after the GDP report.