United Kingdom GDP

United Kingdom

United Kingdom: Economy decelerates in Q1

May 28, 2015

In the first quarter, GDP expanded a seasonally-adjusted 0.3% over the previous quarter, according to more detailed data released by the Office for National Statistics (ONS) on 28 May. The print was in line with the preliminary estimate, thus confirming that the economy grew at the slowest pace in over two years. In addition, the expansion came in below the 0.6% increase observed in the previous quarter. Q1’s figure reflects that an improvement in domestic demand was offset by a worse performance of the external sector.

Private consumption grew a weak 0.6% in Q1, which was still above the 0.4% increase seen in the previous quarter. In addition, government consumption rebounded from a 0.2% contraction in Q4 to a 0.6% increase in Q1. Moreover, fixed investment swung to a 1.5% expansion, which contrasted the 0.6% contraction observed in the previous quarter.

On the external side, exports in Q1 contracted 0.3% over the previous quarter (Q4: +4.6% quarter-on-quarter), while growth in imports accelerated from 1.6% in Q4 to 2.3% in Q1—the highest reading since Q2 2013. As a result, the external sector’s net contribution to growth swung from plus 0.8 percentage points in Q4 to minus 0.9 percentage points in Q1.

In annual terms, GDP grew 2.4% in the first quarter. The figure met the preliminary estimate and marked a deceleration over the 3.0% increase seen in the fourth quarter.

In its latest inflation report from May, the Bank of England projects that the economy will grow 2.5% in 2015 and 2.6% in 2016. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.6% in 2015, which is unchanged from the previous month’s estimate. The panel sees GDP expanding 2.4% in 2016.

Author:, Senior Economist

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United Kingdom GDP Chart

United Kingdom GDP Q1 2015 0

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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