Earlier we noted that UK GDP came in line with expectations of 0.5%.
The pound popped on the news, because if the UK economy is growing again, then perhaps the BoE can raise rates at some point.
But in truth, the UK is in shambles.
Duncan Weldon has a really good explanation of what’s going on, and wrote the following points yesterday:
- Given that snow subtracted 0.5% from growth in Q4, we should expect this to ‘bounce back’ in Q1.
- In addition, some services and purchases (according to the ONS) were postponed in Q4 and should now fall into Q1. So the real minimum we are looking for is about 0.7%.
- If 0.7% would represent no real growth over two quarters, then 1.2% would show the expected bounce back from Q4 plus the economy growing at ‘an average pace’ in Q1.
He also posted this chart to show how rapidly economic expectations are deteriorating. Already the UK is below expectations from March.
So make no mistake. Growth in the UK is horrible following the implementation of austerity.