–Q1 GDP Unrevised at +0.5% q/q; revised down to +1.6% y/y
–Q1 GDP median forecast +0.5% q/q; +1.8% y/y
–Q1 Household Spending -0.6% q/q; -0.5% y/y; largest q/q fall Q2 09
–Net trade adds 1.4pp to q/q growth largest since 1979

LONDON (MNI) – Quarterly economic growth was unrevised in the first
quarter with a sharp fall in domestic spending offset by a boost from
net trade, figures released by National Statistics showed Tuesday.

The figures highlight the squeeze that households are under with
real disposable income falling at its fastest annual pace for more than
30 years and the saving ratio posting a decline.

Gross Domestic Product rose an unrevised 0.5% on the quarter in Q1
and was a downwardly revised 1.6% on the year from the originally
estimated 1.8% increase. Growth in Q3 2010 was revised down slightly to
0.6% on the quarter from 0.7%.

The figures confirmed that household spending declined 0.6% on the
quarter, the largest fall since Q2 2009 with overall domestic spending
down 0.9% on the quarter, also the largest drop since 2009.

Real disposable household income fell 0.8% on the quarter and was
down 2.7% on the year, the first annual decline since Q3 1977 when it
fell 4.5%. This shows just how much the high level of inflation is
eating away at an already weak household sector.

The saving ratio fell to 4.6% in Q1 from 5.1% in Q4.

Government spending was revised down to show a rise of 0.5% on the
quarter from the previously estimate 1% increase while investment was
revised up significantly to show a 2% quarterly fall versus the
initially estimated 4.4% decline.

The driving force behind the economy was the external sector with
net trade adding 1.4 percentage points to quarterly economic growth, the
largest contribution since 1979.

On an output basis, services growth was unrevised at 0.9% on the
quarter while there was a small downward revision to industrial
production and an upward revision to construction. Industrial
production now shows a fall of 0.1% on the quarter, the first fall
since Q3 2009.

The GDP deflator, a measure of inflationary pressures in the
economy rose 1.2% on the quarter and 2.9% 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 7862 7491; email: ukeditorial@marketnews.com

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