MNI DATA IMPACT: UK Q1 GDP Revised Lower, Lowest Q/Q In 40 Yrs

by Laurie Laird

     LONDON (MNI) - The UK economy was even weaker than first estimated in the

opening months of the year, with official data recording the biggest quarterly

contraction since the Autumn of 1979.

     The following are the main points from the UK first quarter national

accounts released on Tuesday by the Office for National Statistics.

     - GDP slumped by 2.2% in the first quarter, down from the

initially-estimated 2.0% plunge, the largest fall since Q3 1979. On an annual

basis, GDP slid by a downwardly-revised 1.7%, the largest decline since Q3 2009.

     - Services fell by 2.3% in the first quarter, far worse than the originally

reported 1.9% decline. Healthcare spending (as measured by output) slumped by

5.7% as fee-generating elective procedures were cancelled, while education

spending declined by 6.0%, both record falls in a series dating back to 1990.

     - Consumer spending plunged by 2.9%, the biggest fall since Q3 1979, down

from the previously-reported 1.7% decline. That lifted the savings rate to to

8.6% in Q1 from 6.6% in the final three months of 2019, the highest level since

Q1 2016.

     - Government spending plummeted by a record-breaking 4.1% in Q1, down from

the initially-reported 2.6%, dampened by more accurate data on education and

healthcare, according to a National Statistics official.

     - Business investment fell by 0.3% in Q1, a downward revision from the flat

performance originally reported. However, investment rose by 0.8% on an annual

basis, a slightly upward revision from the initially-reported 0.7% gain.

Business investment was also revised higher over the course of 2019, to a 0.8%

rise from the 0.6% improvement reported in March.

     - Aside from services, the output components to GDP were revised upward.

Manufacturing fell by 1.1% in the quarter, compared to the previously-estimated

1.7% decline. Production slid by 1.5% ( compared to -2.1% in the previous

report), while construction slumped by 1.7% (-2.8% previously).

     - The economy grew by slightly more than previously reported in 2019,

rising by 1.5%, compared to the earlier estimate of 1.4%, lifted by an upward

revision in Q2 to a 0.1% decline (-0.2% previously).

     - The current account deficit widened sharply to GBP21.2 billion, from a

revised GBP9.2 billion in Q4 (originally reported as GBP5.6 billion), taking the

deficit to 3.8% of GDP from 1.7% in Q4. Excluding precious metals, the deficit

narrowed to GBP19.9 billion (3.6% of GDP) in Q1 from GBP21.2 (3.8% of GDP) in

Q4.

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

[TOPICS: M$B$$$,M$E$$$]