Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

UK GDP rises 0.8% in Q1 as budget deficit widens

UK GDP rises 0.8% in Q1 as budget deficit widens

UK GDP grew by 0.8% over the first quarter, driven by consumer strength, as the budget deficit in April proved larger than expected.

Over the past 12 months, the economy grew 3.1%, in line with expectations, representing the biggest annual increase since the fourth quarter of 2007.

However, April’s public finance figures made for less encouraging reading, with government spending up 0.1% over the quarter. This represented £11.5 billion in April, £2 billion up on last year's figure.

'Since the Office for Budget Responsibility (OBR) expects borrowing this year to be about 11% lower than last year, today’s borrowing number suggests that the fiscal consolidation has not begun the fiscal year on a good footing,' Samuel Tombs, UK economist at Capital Economics.

That said, Tombs explained revisions to the monthly borrowing numbers tend to be larger at the start of the fiscal year, 'so we would caution against drawing any strong conclusions from April’s figures.'

He added: 'The sources of growth seem sustainable and we continue to expect the recovery to broadly maintain its current pace over the coming quarters'.

With reference to GDP over the first quarter, more muted export figures, which fell 1% during the quarter, were offset by a 1.1% drop in imports, the ONS report stated.

Capital Economics highlighted that expenditure breakdown showed the overall recovery is still receiving considerable support from investment.

Indeed, business investment rose by a quarterly 2.7% and was 8.7% higher than a year ago.

'With a strong rebound in investment enhancing the economy’s productive capacity, the recovery is unlikely to hit the buffers and generate inflation soon.'


Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play French fund CEOs: 'Brexit is a lose-lose situation for all of us'

French fund CEOs: 'Brexit is a lose-lose situation for all of us'

'We'll all lose out - but London is an international city, Paris is not.' Leading French asset management CEOs tell us what they think Brexit will mean for the investment business.

Play Henderson Eurotrust's Stevenson: dealing with European cynicism

Henderson Eurotrust's Stevenson: dealing with European cynicism

Tim Stevenson talks about where he finds his opportunities in the current environment in Europe

Play Mark Barnett - part 2: why I'm not buying Lloyds

Mark Barnett - part 2: why I'm not buying Lloyds

In the second part of our exclusive video interview, Barnett explains why he has no intention of buying Lloyds, and where he sees the greatest income opportunities.

Read More
Wealth Manager on Twitter