· Revised GDP figure of 0.5% leaves level of output the same as Q3 2010·
Positive growth for manufacturing, services and exports, but weak domestic demand and a decline in business investment
· BCC will publish its latest economic forecast on Monday 30 May
Commenting on the revised GDP figures for the first quarter of 2011, published today by the Office for National Statistics, David Kern, Chief Economist at the British Chambers of Commerce, said:
“These figures were largely as expected, confirming that GDP has risen by 0.5% in the first quarter of the year. This reverses the fall of 0.5% seen in the fourth quarter of last year, leaving the level of output virtually the same as it was in the third quarter of 2010.
“While it is disappointing that Britain’s performance is still much weaker than that of our major European competitors, such as Germany and France, there are some positive features in these figures. Manufacturing (1.1%) and services (0.9%) have recorded solid growth. There has been a significant improvement in our international trading position with exports growing and imports falling. However, domestic demand was weak with falls in consumer spending and a disappointing decline in business investment.
“The outlook for the economy remains highly uncertain. While we expect growth in the second quarter to remain in positive territory, the pace of expansion is likely to be slow.”
“The government’s austerity plan is now being implemented more forcefully and lost working days in April may also have dampened activity. However, the medium-term outlook appears more positive and we expect the rebalancing of the economy towards the private sector to have longer term beneficial effects. The government must support these trends by enforcing measures to empower businesses to export and invest more. On its part the MPC must wait a little longer before it starts to raise interest rates.