Britain awaits key first-quarter growth data before May vote

23rd April 2010, Comments 0 comments

Britain will discover Friday whether its troubled economy suffered a relapse in the first quarter of 2010, with a crucial data release due before next month's general election.

The performance of the economy, which escaped from a record recession in the final three months of 2009 with growth of 0.4 percent, has become a major issue in the run-up to national polls on May 6.

At 0830 GMT on Friday, the Office for National Statistics will publish the first official forecast of gross domestic product (GDP) for the first three months of the year.

Market expectations are that the economy also grew by 0.4 percent in the three months to March but the outcome is far from certain, according to Howard Archer at the IHS Global Insight consultancy in London.

"There is massive uncertainty surrounding Friday's preliminary GDP release ... due to the serious hit to economic activity in January coming from the arctic weather conditions," he said.

"Hard data and surveys indicate overall that economic activity bounced back pretty well in February and March after a serious hit in January from the weather," he noted, adding that he predicts growth of 0.4 percent.

But Archer also warned: "There is a risk that this first estimate of GDP ... may be skewed downwards by January's very poor data."

Economist Chris Williamson at data and research group Markit expects a gain of 0.5 percent after recent signs of a strengthening recovery.

"With an ongoing manufacturing-led recovery in output gathering momentum and becoming increasingly broad-based, spreading to services and construction, the surveys indicate that businesses are beginning to rebuild inventories and raise expenditures on investment," Williamson said.

However, Prime Minister Gordon Brown, whose Labour Party is fighting to remain in office after 13 years in power, has faced a barrage of grim data so far this week.

Twelve-month inflation jumped to a higher-than-expected 3.4 percent in March and unemployment hit a 16-year high of 2.502 million people in the three months to February, according to figures earlier this week.

And on Thursday it emerged that public borrowing soared to a record high of 152.8 billion pounds in the 2009/2010 financial year through to the end of March.

A small bright spot was that at least this massive borrowing undershot the government's official forecast.

Retail spending meanwhile remained sluggish, growing by just 0.4 percent in March from February.

© 2010 AFP

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