MNI 5 THINGS: Sharpest UK Biz Investment Decline Since Brexit

By Jai Lakhani and Jamie Satchithanantham

     LONDON (MNI) - The following are the key points from the second reading of

the UK Q1 GDP data published Friday by the Office for National Statistics.

     -In line with analyst expectations, Q1 GDP growth was unrevised from its

preliminary estimate of 0.1%, down sharply down 0.4% in Q4 2017. While there

were no revisions made on an output basis, the expenditure breakdown revealed

the weakest growth in both consumer spending and business investment since the

2016 Brexit vote.

     -Whilst gross fixed capital formation (GFCF) was up 0.9% on the quarter,

business investment, a sub-sector of GFCF which captures only private sector

investment, fell by 0.2%, the weakest since the Brexit vote.

     -Household spending took a hit at the start of Q1, with growth of 0.2% the

lowest since Q4 2014. On the year, quarterly growth of 1.1% y/y was the lowest

since Q1 2012. ONS officials warned against using adverse weather as the sole

explanation, saying that spending has been trending lower since 2016.

     -If output was going to be revised, services would have been the driving

force behind this. However, the 0.3% 3m/3m growth and 0.1% m/m growth in March

was unchanged from the first estimate. Production and construction were also

unchanged from estimates released earlier this month.

     -Net trade failed to exert any influence on Q1 GDP. Exports fell by 0.5%

q/q, while imports fell 0.6%. This is the second consecutive quarter net trade

has failed to contribute to GDP, possibly suggesting the bulk of the sterling

boost has run its course.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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