ITEM Club comment on today’s GDP Figures

25 April 2013

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Andrew Goodwin, senior economic advisor to the EY ITEM Club, comments on today’s GDP figures:

  • It shows how low we set the bar that 0.3% growth comes as a pleasant surprise
  • Growth is still very unbalanced – but unbalanced growth is better than no growth
  • We are optimistic that this will represent the start of a more sustained recovery

“An upside surprise for once, though it shows how low we now set the bar that growth of 0.3% comes as a welcome surprise. Indeed, while the threat of a triple dip has been averted, year-on-year growth of just 0.6% provides a stark reminder of how weak this recovery has been.
“Once again we’re seeing the service sector having to do all of the heavy lifting and within that consumers and the government continue to play a major role. What we’re seeing is unbalanced growth, but beggars can’t be choosers and unbalanced growth is better than no growth at all.
“We’re optimistic that this will mark the beginning of a more sustained recovery after several false starts over the past eighteen months. The government’s various schemes around the housing market should help to stabilise the slumping construction sector, while struggling manufacturers will benefit from the weaker pound and emerging global recovery. Consumers should also continue to offer some support, making use of the extra cash they’ve been given through the large increase in the income tax personal allowance. But even so, growth is likely to be below 1% this year so it’s still going to feel like a long, hard slog.”