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The UK financial system grew quicker than beforehand estimated within the first quarter, helped by stronger family spending, based on official information that implies the subsequent prime minister may gain advantage from a steadier restoration.
GDP elevated by 0.7 per cent within the first three months of 2024, revised up from a primary estimate enhance of 0.6 per cent, the Workplace for Nationwide Statistics stated on Friday.
This was the quickest progress for the reason that finish of 2021 and ended final 12 months’s technical recession. It was additionally the best of any G7 nation.
“The upward revision to Q1 GDP suggests whoever is prime minister this time subsequent week might profit from the financial restoration being a bit stronger than our already above-consensus forecast,” stated Paul Dales, economist at Capital Economics. He added that progress in 2024 as an entire “could also be extra prone to are available a bit above our present forecast of 1 per cent”.
The revision comes lower than every week forward of the overall election. Within the polls the Conservatives path Labour by about 20 share factors.
Nevertheless, month-to-month figures launched earlier within the month confirmed the economy reported zero progress in April as moist climate weighed on exercise.
The revision to the primary quarter figures was as a consequence of stronger than initially estimated progress in shopper spending, as much as 0.4 per cent from 0.2 per cent, and from a bigger contribution from web commerce. Nevertheless, authorities spending grew lower than beforehand thought.
Final week, the Financial institution of England stated it anticipated the strong progress seen initially of the 12 months to proceed within the second quarter for which it forecast an growth of 0.5 per cent, up from the 0.2 per cent anticipated in Might. Nevertheless, for the rest of the 12 months, the central financial institution anticipated a slower tempo of underlying progress, of about 0.25 per cent per quarter.
The ONS information confirmed that GDP per head, a measure of dwelling requirements, rose 0.5 per cent quarter on quarter. This was quicker than the 0.4 per cent initially estimated and ended seven quarters of contraction. Nevertheless, the measure was nonetheless 1.3 per cent decrease than within the first quarter of 2022, reflecting how the financial system struggled previously two years amid elevated inflation and rising borrowing prices.
Actual family disposable earnings grew for the second consecutive quarter by a powerful tempo of 0.7 per cent, boosting saving charges to 11.1 per cent, the best for the reason that second quarter of 2021.
This might assist progress subsequent 12 months as larger confidence may lead customers to spend extra of their financial savings.
Nevertheless, the efficiency of the UK financial system over the previous few years stays weak.
In contrast with the fourth quarter of 2019, earlier than the pandemic, the UK financial system grew just one.8 per cent, the second weakest within the G7 after Germany and nicely beneath the 8.6 per cent growth within the US.
Adam Corlett, economist at think-tank Decision Basis, stated: “The final 5 years have been horrible for dwelling requirements progress.
“Revenue progress over the parliament to date has been worse than in another for the reason that Nineteen Fifties, and the third worst in post-Edwardian Britain.”