Growth revised upwards
Sterling rises as economy shows tentative signs of pick up
Growth for the three months to March was 0.2%, against the earlier estimate of 0.1%, according to the Office for National Statistics.
However, year-on-year growth was unrevised at 1.2%, the weakest performance since the second quarter of 2012.
Separate data showed that the services sector – which accounts for about 80% of the UK’s economy – grew by 0.3% in April, the fastest monthly rate since last November.
Against the dollar, sterling rose by about half a cent to $1.3153.
EY Item Club noted that consumer purchasing power remained relatively limited in the first quarter with real household disposable income rising 0.3% quarter on quarter and 2% year on year in the first quarter.
“Worryingly, the already low household savings ratio dipped to 4.1% from 4.5% in the fourth quarter of 2017,” said EY which expects GDP growth of 1.3% in 2018 GDP, the weakest performance since 2009. Growth is seen improving to 1.6% in 2019.
The Scottish Government also today published its ‘State of the Economy’ report which showed that the economy continued to grow into the first quarter of 2018 though at below trend rate.
The labour market continues to perform strongly and close to record levels in terms of employment and the rate of unemployment.
Independent forecasts signal GDP growth for 2018 of between 0.7% and 1.3% rising to between 0.8% and 1.6% in 2019.
Finance, Economy and Fair Work Secretary Derek Mackay said: “Scotland’s economy is strong, with output per head the highest in the UK outside London and the south-east. We are also one of the top destinations for inward investment, while Scottish productivity has grown faster than the UK’s over the past decade.”
However, the Scottish Retail Consortium noted that the report shows consumer sentiment weakened further during the second quarter of 2018, a period when rises in income tax, council tax and statutory minimum employee pension contributions came into effect.
David Lonsdale, Director of the Scottish Retail Consortium, said: “Family finances are under strain as inflation, tax rises and other cost increases take a bite out of shoppers’ purses and wallets. Disposable incomes simply do not stretch as far as they used to, presenting retailers with a more challenging marketplace.
“With half of VAT receipts being assigned to Holyrood from next year our MSPs will have an even bigger direct stake in improving consumer sentiment and ensuring a flourishing retail industry.”