THE UK economy grew by half a per cent in the first quarter of the year, according to official data released yesterday.
The second estimate of 2011’s GDP growth matched the Office for National Statistics’ (ONS) preliminary calculations, yet a prominent group of economists continue to cast doubt on the figures.
“We still think that this understates the underlying strength of the economy,” said Andrew Goodwin of the Ernst & Young Item Club.
“The construction figures are quite clearly unreliable given their sudden extreme volatility and lack of consistency with any other evidence from the sector. When considering the underlying strength of the economy we are taking the construction data out of our calculations,” Goodwin added.
The economy grew by 0.8 per cent in the first three months of the year if the construction figures are discounted, Item said. Extremely weak domestic demand is being offset by an upturn in demand from overseas, the ONS breakdown of figures showed.
“Private consumption contracted by 0.6 per cent quarter-on-quarter, after a 0.3 per cent decline in the fourth quarter of 2010,” noted Eoin O’Callaghan of BNP Paribas. “Yet exports rose by 3.7 per cent on the last quarter, nearly double consensus expectations. Imports, meanwhile, dropped by over two per cent quarter-on-quarter,” he added.