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Revised Real GDP- Blog

27 August 2010

Nigel Jump, Chief Economist

The revised UK GDP figures for April-June increased the real rate of growth slightly from +1.1 per cent to +1.2 per cent. This strong figure reflected an even better performance by construction of +8.5 per cent, recovering from the poor weather earlier in the year.

Manufacturing and business services did well (+1.6 per cent and +1.5 per cent respectively) in the second quarter. In contrast, the rest of services were relatively subdued, including a large fall of -2.2 per cent in transport and communications.

Consumer spending was +0.7 per cent higher last quarter. Other expenditure measures were subdued with investment still negative (-2.4 per cent), government spending slowing noticeably (+0.3 per cent) and net exports (+0.2 per cent) also only modestly increasing.

It is likely that consumer spending will be boosted in the last four months of the year ahead of the VAT increase in January. This trend may make 2010 growth higher than most forecasters currently expect, albeit at the expense of output in 2011 when tax increases, spending cuts and more uncertainty about incomes and employment will damage demand.

For more information contact Claire Wickes on 01392 229 389 or via e-mail on claire.wickes@southwestrda.org.uk