Osborne welcomes UK economic growth
BRITAIN’S economy grew more strongly than previously thought in the first quarter and official figures also revealed a better performance for 2014.
Gross domestic product (GDP) increased by 0.4 per cent between January and March, up from a previous estimate of 0.3 per cent, according to the Office for National Statistics (ONS).
The ONS added that a raft of data revisions mean the economy grew by 3 per cent in 2014 – up from earlier estimates of 2.8 per cent.
The latest breakdown of economic data for the first three months of the year showed real household disposable income rose at the fastest annual pace since 2001 – up by 4.5 per cent year-on-year – helping drive growth in GDP and offset a dire quarter for UK trade.
Yesterday’s upward revision was widely expected, given that economists and the Bank of England had seen the initial estimates as being too low.
But it still marks a sharp slowdown on the 0.6 per cent growth seen in the final three months of 2014.
Chancellor George Osborne welcomed the growth revisions, which come ahead of his summer Budget on 8 July.
He said: “It is clear that our plan is laying the foundations for economic security for working people, with the three main sectors of the economy growing over the past year and business investment over 30 per cent higher than at the start of the last parliament.
“Today’s figures are another reminder that the economic plan we’ve pursued in Britain these last five years has increased our resilience – and we will take whatever further steps are needed to protect the UK from the new risks we see to our economic security.”
Disposable incomes are rising thanks to a combination of ultra low inflation, rising wage growth and rock bottom interest rates, which is providing a welcome boost to family budgets.
While consumer prices index inflation – currently running at 0.1 per cent – is expected to increase sharply towards the end of the year, experts believe wages will continue to outstrip rises in the cost of living.
Samuel Tombs, senior UK economist at Capital Economics, said: “Growth in households’ real incomes should pick up now that real earnings are growing at pre-recession rates.
“We still think that GDP growth this year could be very close to last year’s 3 per cent rate, ensuring that the UK remains the fastest growing G7 economy for another year.”
The ONS said year-on-year growth in the first quarter of 2015 was also revised up, to a higher-than-forecast 2.9 per cent from the 2.5 per cent initially reported.
Experts said the revisions may increase pressure on policymakers at the Bank of England to consider raising interest rates, given rising incomes and a stronger employment market.