UK GDP was dragged down by a slump in net exports and significant running down of inventories, despite the counterweight made by growing government consumption, according to OECD research published yesterday.
GDP’s fall of 0.3 per cent in the first quarter was driven mainly by contributions of -0.5 per cent from running down stocks of goods, and -0.4 per cent from increased imports and decreased exports.
Positive contributions of 0.3 per cent from gross fixed capital formation – investment – and 0.4 per cent from government deficit spending, were thus outweighed.
Though private consumption was another drag, even without it GDP would have shrunk 0.2 per cent over the quarter.
This comes in the context of a gloomier previous quarter. In the fourth quarter of 2011 GDP shrunk 0.4 per cent, with components making surprisingly different contributions. Then, de-stocking was faster, contributing -1.2 per cent, but was counteracted by a positive contribution by private consumption of 0.3 per cent. Net exports also made a contribution in the positive direction, of 0.4 per cent. However, GDP was 0.1 per cent worse than it would have been due to poor investment over the period.