Forecast growth of 0.9% would be the fastest growth since the second quarter of 2010 when GDP rose 1%
Britain’s economy clocked up its fastest growth for almost four years during the first quarter of 2014, outpacing other advanced nations, according to economists’ forecasts ahead of official GDP data this morning.
The first official estimate of GDP for the January to March quarter due at 9.30am is expected to show the economy grew 0.9%, according to the consensus forecast in a Reuters poll of economists. That would mark an acceleration from 0.7% in the final quarter of 2013 and would be the fastest growth since the second quarter of 2010 when GDP rose 1%. There was a range of views in the poll of City analysts, with the highest forecast at 1.1% growth and the lowest 0.5%.
“The UK was one of the most severely impacted economies following the global financial crisis… Now, after a protracted period of weakness the economy is back on its feet and is growing robustly,” says James Knightley, economist at ING bank in London, predicting growth of 0.8% in the first quarter.
Allan Monks, economist at JPMorgan in London, expects 0.9% growth with “broad based strength across manufacturing, services and construction”.
“This outturn is expected despite heavy rainfall in the first half of the quarter, which the monthly data suggest affected output most notably in the construction and oil and gas sectors,” he said.
A pick-up in GDP growth would be a further boost for chancellor George Osborne on top of predictions from the International Monetary Fund this month that the UK will be the best performing of the world’s largest economies this year.
There have been concerns, however, that the recovery remains consumer-led, with signs that households have driven down their savings to keep spending and been buoyed by the feel-good factor of an increasingly frothy housing market.
Anti-poverty campaigners and trade unions have also argued the recovery is not being widely felt. While headline unemployment has fallen faster than policymakers had expected and average pay is now rising again in real terms, a high number of people remain underemployed – working fewer hours than they would like. Official data on Wednesday will reveal the number of people on zero-hours contracts, many of them struggling with low pay and financial insecurity. There has also been a sharp rise in self-employment in recent years, with a large proportion of new business owners saying they were forced into working for themselves.
There is more mixed news for jobseekers in a report this morning that advertised salaries have fallen 5.3% over the last year. Once inflation was factored in, average salaries dropped £2,358 in real terms over the last 12 months to £31,818 in March, according to jobs search site Adzuna. Pay slipped furthest in graduate jobs, in retail and in customer services.
“Salaries have stagnated most in areas like London, where widespread cuts in the public sector have been replaced by significant growth in lower paid, private sector roles,” the report says.
But vacancies were up 24% year-on-year and competition for jobs was down. There were 1.42 jobseekers for every advertised vacancy in March this year, compared with 2.33 a year earlier.