–Q1 GDP Unrevised at +0.5% q/q; +1.8% y/y; in line with median
–Q1 Household Spending -0.6% q/q; -0.3% y/y; largest q/q fall Q2 09
–Net trade adds 1.7pp to q/q growth largest since 1955

LONDON (MNI) – Economic growth went unrevised in the first quarter
as a record boost from net trade more than offset a sharp fall in
domestic demand, according to figures released by National Statistics
Wednesday.

The figures will increase concerns surrounding the already fragile
consumer sector and help to explain why the Bank of England has been so
reluctant to tighten monetary policy.

Gross Domestic Product rose 0.5% on the quarter in Q1 and was up
1.8% on the year, unrevised from the preliminary estimate and in-line
with the median forecast from City economists.

New data showed household spending fell 0.6% on the quarter in Q1,
the largest fall since Q2 2009, and was down 0.3% on the year.

There was also a 4.4% decline in investment spending, the largest
since Q2 2009.

Only government spending, which is due to be cut over the coming
years, added to domestic growth, rising 1% on the quarter.

Overall domestic demand plunged 1.3% on the quarter, the largest
drop since Q1 2009.

A brighter note came from the external sector with net exports
adding 1.7 percentage points to quarterly economic growth, the largest
contribution since 1955. Following the sharp depreciation in Sterling
seen over the past few years this would appear to be the long awaited
rebalancing many economists have been waiting for.

National Statistics did caution that changes to the VAT treatment
of aircraft meant that around one-third of this boost from net trade had
occurred as imports were boosted in Q4 and were pulled lower in Q1.

On an output basis, services growth was unrevised at 0.9% on the
quarter while there was a small downward revision to industrial
production to 0.2% from 0.4%.

Construction output was revised up to -4.0% on the quarter from the
-4.7% reported in the preliminary data release.

The GDP deflator, a measure of inflationary pressures in the
economy rose 1.8% on the quarter and 2.8% on the year. National
Statistics said that the quarterly rise was boosted by the increase in
VAT to 20% from 17.5%.

–London newsroom: 44 20 7634 1655; email: ukeditorial@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]