The Workplace for Nationwide Statistics is sticking to its view that the “Beast from the East” was not primarily answerable for the collapse in GDP progress within the first quarter of this 12 months.
Financial institution of England officers earlier this week mentioned they didn’t share the view of the ONS that the autumn in GDP progress to simply zero.1 per cent within the three months to March – the worst studying in additional than 5 years – was not primarily because of the snow storms.
The Financial institution’s Governor, Mark Carney, instructed the Treasury Choose Committee that they although the ONS’s survey technique for gathering data from corporations on the extent of snow disruption was flawed and mentioned that progress would in the end possible be revised as much as zero.three per cent.
The actual causes behind collapse of UK financial progress to 6-year low
However unveiling its second estimate of GDP progress within the quarter on Friday the ONS didn’t revise its view that there was proof of an underlying UK progress slowdown too.
“General, the financial system carried out poorly within the first quarter…Whereas there was some proof of the poor climate hitting building and excessive road buying, this was offset to an extent by elevated power provide and on-line gross sales,” mentioned Rob Kent-Smith, the ONS’s head of GDP.
The headline estimate of progress was unchanged at zero.1 per cent.
The ONS added that it now estimates enterprise funding fell by zero.2 per cent within the quarter, the weakest efficiency since Q3 2015, whereas family spending progress slowed to zero.2 per cent, the worst since 2014.
After accounting for inhabitants progress, the ONS thinks that GDP per capita fell by zero.1 per cent within the quarter.
The query of whether or not the hunch in progress in Q1 is a brief blip attributable to unhealthy climate or is proof of an underlying slowdown is essential to the trail of rates of interest.
Financial institution policymakers consider it’s more likely to be the previous, indicating earlier this month that they’re more likely to elevate rates of interest once more later this 12 months.
Nonetheless, they held off from fee hike to zero.5 per cent in Could on the idea of the shock GDP figures and need to see extra information confirming their view that the hunch is non permanent.
The Financial institution’s Governor, Mark Carney, conceded on Thursday that there is perhaps deeper issues within the financial system.
“The weak point in demand at first of the 12 months may mirror a worsening of the underlying financial local weather, not the non permanent results of opposed climate because the Committee presently assesses… there’s a threat that households may decide to save lots of quite than spend as their actual incomes get better,” he mentioned.
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