According to revised figures released Tuesday, the U.K. economy grew by 2.9
percent in the first quarter of 2015 from the same time last year –
the sort of growth level that economists took for granted pre-credit
crisis, says CNBC.
U.K. consumers seem to respond, as research agency GfK showed confidence back at levels not seen for more than a decade - "a real post-election bounce that's put a spring in the step of consumers across the U.K.," says Joe Staton, head of market dynamics at GfK.
With weak inflation aiding to keep the costs of the weekly shop
down, real household disposable income climbed by 4.5 percent in the first
three months of 2015, the fastest rate since the second quarter of
2001.
There are also positive signs from business investment, which was up 5.7 percent in the first quarter from the same time in 2014.
At the same time, the positive numbers may not be sufficient to incline the Bank of England's rate-setting committee to raise interest
rates sooner than the mooted first half of 2016.
In a
speech to the U.K.'s Open University on Tuesday Andy Haldane, the bank's chief economist, mentioned a
"dread risk" of spending in the economy and a "recession
risk" which still lingers.
The
balance of payments deficit, essentially the difference between money
coming in and out of the country, is a piece of data that may concern the bank the most.
The balance of payments deficit was still 5.8 percent of gross
domestic product (GDP) in the first three months of 2015 – a historically high figure
that the bank has previously expressed concerns about.
Weakness in
exports signals U.K. manufacturers are not getting the benefit of the
euro zone recovery, possibly because of the strength of Britain's pound sterling.
Chris Williamson, chief economist at Markit, said in a statement that "Policymakers will be worried about the poor export performance and also concerned that the economy may be slowing in the summer as sterling's strength continues to hit competitiveness."
