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| Version 4 | Version 5 |
|---|---|
| Surprise upgrade to UK growth | Surprise upgrade to UK growth |
| (about 2 hours later) | |
| The UK's economic growth has been revised up for the first quarter of the year after construction data was found to be stronger than earlier estimates. | The UK's economic growth has been revised up for the first quarter of the year after construction data was found to be stronger than earlier estimates. |
| Growth for the three months to March was 0.2%, the Office for National Statistics said, a surprise upgrade from the earlier estimate of 0.1%. | Growth for the three months to March was 0.2%, the Office for National Statistics said, a surprise upgrade from the earlier estimate of 0.1%. |
| The pound jumped as speculation grew about the possibility of an interest rate rise later this year. | The pound jumped as speculation grew about the possibility of an interest rate rise later this year. |
| Against the dollar, sterling was up 0.8% at $1.3181 in afternoon trade. | |
| Rob Kent-Smith of the ONS said: "GDP growth was revised up slightly in the first three months of 2018, with later construction data, and significantly improved methods for measuring the sector, nudging up growth." | Rob Kent-Smith of the ONS said: "GDP growth was revised up slightly in the first three months of 2018, with later construction data, and significantly improved methods for measuring the sector, nudging up growth." |
| Separate data from the ONS showed that the key 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. | Separate data from the ONS showed that the key 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. |
| 'Cautiously upbeat' | 'Cautiously upbeat' |
| Last week, the Bank of England kept UK interest rates on hold at 0.5% but signalled that an August rate rise was more likely than previously thought. | Last week, the Bank of England kept UK interest rates on hold at 0.5% but signalled that an August rate rise was more likely than previously thought. |
| At the meeting, the Bank's chief economist, Andrew Haldane, joined two other Monetary Policy Committee (MPC) members in voting to raise rates to 0.75%. | At the meeting, the Bank's chief economist, Andrew Haldane, joined two other Monetary Policy Committee (MPC) members in voting to raise rates to 0.75%. |
| Following the latest growth figures from the ONS, Ruth Gregory at Capital Economics said: "We remain cautiously upbeat about the economy's near-term prospects and continue to think that the MPC will press ahead and raise interest rates at its next meeting on 2 August." | Following the latest growth figures from the ONS, Ruth Gregory at Capital Economics said: "We remain cautiously upbeat about the economy's near-term prospects and continue to think that the MPC will press ahead and raise interest rates at its next meeting on 2 August." |
| However, economists also noted that the figures contained some worrying signs. Household spending increased by a modest 0.2% over the quarter, and the household savings ratio fell from 4.5% to 4.1% - the third-lowest quarterly ratio since records began in 1963. | However, economists also noted that the figures contained some worrying signs. Household spending increased by a modest 0.2% over the quarter, and the household savings ratio fell from 4.5% to 4.1% - the third-lowest quarterly ratio since records began in 1963. |
| The savings ratio for 2017 as whole was 4.1% - a record low. | The savings ratio for 2017 as whole was 4.1% - a record low. |
| In addition, business investment shrank by 0.4% - worse than the previous estimate of a 0.2% contraction. | In addition, business investment shrank by 0.4% - worse than the previous estimate of a 0.2% contraction. |
| John Hawksworth, chief economist at PwC, said: "We expect UK GDP growth to pick up slightly to 0.3-0.4% in the second quarter of 2018 and to average around 1.3% in 2018 as a whole." | John Hawksworth, chief economist at PwC, said: "We expect UK GDP growth to pick up slightly to 0.3-0.4% in the second quarter of 2018 and to average around 1.3% in 2018 as a whole." |
| Samuel Tombs at Pantheon Macroeconomics said he expected the economy to expand by 0.3% in the second quarter, with the Bank of England waiting until early next year to raise rates again. | Samuel Tombs at Pantheon Macroeconomics said he expected the economy to expand by 0.3% in the second quarter, with the Bank of England waiting until early next year to raise rates again. |
| Official figures showed that the UK's current account deficit narrowed to £17.7bn in the first three months of the year, down from a deficit of £19.5bn in the final quarter of 2017. | Official figures showed that the UK's current account deficit narrowed to £17.7bn in the first three months of the year, down from a deficit of £19.5bn in the final quarter of 2017. |
| However, the ONS also revised down its estimate for economic growth during 2017. It now says the economy grew by 1.7% last year, the weakest rate since 2012 and down from an earlier estimate of 1.8%. | However, the ONS also revised down its estimate for economic growth during 2017. It now says the economy grew by 1.7% last year, the weakest rate since 2012 and down from an earlier estimate of 1.8%. |
| Analysis | Analysis |
| Andy Verity, BBC economics correspondent | Andy Verity, BBC economics correspondent |
| The government borrows money to top up its spending. Cue years of austerity. Households borrow more to top up their spending. Cue the sound of no-one falling off their chairs. Why have we spent nearly a decade fussing about the former - and ignoring the latter? | The government borrows money to top up its spending. Cue years of austerity. Households borrow more to top up their spending. Cue the sound of no-one falling off their chairs. Why have we spent nearly a decade fussing about the former - and ignoring the latter? |
| After all, if you want to know what affects you more directly - the government's deficit, or your own - there's no argument. Remember that pre-2015 election idea - everyone should have a pay rise? Well if you're average, you didn't get one until very recently. | After all, if you want to know what affects you more directly - the government's deficit, or your own - there's no argument. Remember that pre-2015 election idea - everyone should have a pay rise? Well if you're average, you didn't get one until very recently. |
| Official figures released today show real household disposable incomes fell in both 2016 and 2017 - despite tax cuts such as higher personal allowances. And because he was outspending his income, Joe Public had to borrow more to make up the difference. As a proportion of income the amount saved was at its lowest on record in 2017 at 4.1%. | Official figures released today show real household disposable incomes fell in both 2016 and 2017 - despite tax cuts such as higher personal allowances. And because he was outspending his income, Joe Public had to borrow more to make up the difference. As a proportion of income the amount saved was at its lowest on record in 2017 at 4.1%. |
| The official statisticians now think we households had to borrow more to top up our spending than previously guessed - about £5.8bn between us in the first quarter of the year. | The official statisticians now think we households had to borrow more to top up our spending than previously guessed - about £5.8bn between us in the first quarter of the year. |
| More austerity for households isn't exactly an appealing message. But there is another way. Now, about that pay rise… | More austerity for households isn't exactly an appealing message. But there is another way. Now, about that pay rise… |