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Britain's GDP growth remains steady at 0.5 pct in Q1: NIESR

Xinhua, April 8, 2017 Adjust font size:

Britain's GDP growth was 0.5 percent over the three months to the end of March, according to figures released on Friday afternoon.

The National Institute of Economic and Social Research (NIESR), a London-based economics think-tank, revealed that growth over the January-March period was the same as the December to February figure at 0.5 percent.

More up-to-date services and production data meant that NIESR revised up its growth figure for January from previous estimates to 0.8 percent, but revised down its February figure to 0.5 percent from 0.6 percent.

It is a little bit too early to tell if this slowdown is driven by a retail slowdown, James Warren, senior research fellow at NIESR told Xinhua. Consumer spending is currently a major contributor to Britain's economic growth, and attention is focussed on it in the wake of the Brexit referendum vote.

Economic performance in the three months to November and also to December had been strong, but there had been "quite a weak January with a little bit of a rebound in February," said Warren.

"In the longer term we are expecting inflation to rise and this will put pressure on households," said Warren, but firm evidence of this has yet to appear.

Warren said he expected a slowdown in retail sales growth, with wages failing to keep pace with the sharply rising CPI inflation, currently at 2.3 percent in February up from 0.5 percent in June at the time of the Brexit referendum vote.

However, despite the worries of a negative Brexit effect, Warren said 0.5 percent growth was "still very reasonable" and there is no weakness to be alarmed about.

This is broadly in line with NIESR's latest quarterly forecast, published in February, projected GDP growth of 1.7 percent per annum in 2017 and 1.9 percent in 2018.

Warren said he expected the central bank, the Bank of England (BOE), to "look through" the current sharp rise in inflation and to maintain its current accommodative stance on monetary policy.

The bank rate expected to stay at its current record low of 0.25 percent, said Warren, a stance which diverges from the current U.S. Federal Reserve policy of increasing rates. Endit