United Kingdom GDP

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United Kingdom: Economy continues expanding in Q1, matches preliminary estimate

May 22, 2014

In the first quarter of 2014, GDP expanded a seasonally-adjusted 0.8% over the previous quarter according to more detailed figures released by the Office for National Statistics (ONS) on 22 May (Q4: +0.7% quarter-on-quarter). The reading was in line with both the preliminary estimate and market expectations. In annual terms, GDP grew 3.1%, which was up from the 2.7% expansion recorded in the fourth quarter and marked the strongest expansion since Q4 2007.

According to revised figures, Q1’s expansion came on the back of improving domestic demand, while the contribution from external demand to overall economic growth was flat over the previous quarter. Private consumption accelerated to a 0.7% rise (Q4: +0.3% qoq) and government spending inched up 0.1% (Q4: 0.0% qoq). Conversely, fixed investment decelerated to a 0.6% expansion in Q4, down from the 1.9% rise seen in the last quarter of 2013.

On the external side of the economy, exports of goods and services contracted 1.0% in the first quarter, which markedly contrasted the 2.8% expansion recorded in the previous quarter. Meanwhile, imports fell 1.1%, which was down from the 0.4% drop tallied Q4. As a result, the external sector’s net contribution to the overall economy deteriorated from a 1.0 percentage-point contribution in Q4 to a flat contribution in Q1.

In its May inflation report, the Bank of England (BoE) projects that the economy will grow 3.4% in 2014 and 2.9% in 2015. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.6% in 2014, which is up 0.1 percentage points from the previous month’s estimate. The panel sees growth decelerating to 2.3% in 2015.


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United Kingdom GDP Q1 2014

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Office for National Statistics (ONS) and FocusEconomics Consensus Forecast.


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