The UK economy grew faster than previously thought at the start of this year, as it emerged from last year’s short recession. Newly updated GDP data, just released, shows that the economy grew by 0.7% in January-March. That’s up from a previous estimate of 0.6%, and confirms that the UK was the fastest-growing G7 economy in the first quarter of this year.
That could bolster Rishi Sunak’s argument that the economy is turning a corner, ahead of next week’s general election. The Office for National Statistics released this encouraging news in the UK’s latest GDP quarterly national accounts, for January to March 2024. They show that the UK’s services sector expanded by 0.8% in the quarter, up from a previous estimate of 0.7% growth. Production, though, is now estimated to have grown by 0.6%, revised down from a 0.8% increase. The construction sector shrank by 0.6%, as builders were hit by bad weather this year.
GDP per capita is a better measure of economic performance, as it measures how much the economy grew for each member of the population. And there’s good news here too, finally. Real GDP per head is estimated to have increased by 0.5% in the first quarter of 2024, up from a previous estimate of 0.4% growth. That follows seven consecutive quarters without positive growth. And on an annual basis, real GDP per capita – basically a measure of living standards – is estimated to be 0.6% lower compared with the same quarter a year ago.
Interestingly, the UK’s household savings ratio has risen – showing that people have more excess cash than at the end of last year. The household saving ratio is estimated at 11.1% in the Jan-Mar quarter, up from 10.2% in Oct-Dec. This ratio measures the average percentage of disposable income that is saved. The ONS says this is driven by an increase in pensions, in income from wages and salaries, and by the cut in national insurance rates at the start of the year.
The agenda • 7am BST: UK national accounts for Q1 2024 • 7am BST: German retail sales for May • 7.45am BST: French inflation rate for June • 8.55am BST: German unemployment report for June • 10am BST: Italian inflation rate for June • 1.30pm BST: US PCE inflation index for May • 3pm BST: University of Michigan’s consumer sentiment index (June)
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