Lindsay James, investment strategist at wealth manager Quilter Investors, said: “With UK GDP having shown no growth in the latest data covering the month of April, news that the better growth rate of 0.6% in the first quarter has been upgraded marginally compared with earlier readings will do little to enthuse investors.
“The Bank of England expects a more modest growth rate of 0.2% in the second quarter, which, although forecast before the announcement of the election and indeed the publication of the better-than-expected Q1 figures, may end up being close to the truth as recent surveys have indicated a pause in spending decisions within the crucial services sector during the election period.”
She added: “The second half of 2024 seems likely to be slow to change gear, despite the energy of a probable new government, with any noticeable changes not likely to be felt until 2025.
READ MORE: Revealed: Scotland’s Top 100 private companies
“With the wet spring that has firmly held back the retail sector finally giving way to warmer weather and interest rates likely to be heading down by year-end, it could well be that better growth lies ahead. However, until the next Budget makes both taxation and spending plans clear, businesses are unlikely to invest at scale, delaying any meaningful acceleration in GDP growth yet further.”
Services sector output grew by 0.8% quarter-on-quarter in the opening three months of this year, with production expanding by 0.6%. However, construction sector output dropped 0.6%.
READ MORE: Denial after denial from brass-necked Tory arch-Brexiter
Danni Hewson, head of financial analysis at stockbroker AJ Bell, said: “Figures had already confirmed that the country had plodded out of recession at the start of 2024. Now, the ONS has confirmed that plod had a little more pace.”
However, she added: “There are concerns, particularly within the sluggish construction sector; little wonder then that housebuilding has been a key battleground over the past few weeks.
READ MORE: Ian McConnell: Stand-up comedy beckons as leader delivers the laughs
“And, whilst 0.7% is higher than growth seen in other G7 countries in the first quarter of the year, there are questions about how sustainable even that sluggish pace really is.”
Real household disposable income grew by 0.7% for a second consecutive quarter in the opening three months of this year. Meanwhile, real household expenditure grew by 0.4% quarter-on-quarter in the first three months of 2024.
Peter Arnold, UK chief economist at accountancy firm EY, noted “the income breakdown indicated that Q1’s 0.4% rise in consumer spending was supported by continued strong growth in real household disposable income”.
READ MORE: Ian McConnell: Muzzled dog, yes, but Swinney also hits nail on head
He declared that the EY ITEM Club think tank believes quarter-on-quarter GDP growth in the three months to June “will probably come in a bit softer than Q1’s strong rise”.
Mr Arnold added: “Further ahead, the EY ITEM Club expects low inflation and persistently strong pay growth to mean real household incomes continue to grow strongly. Provided rising consumer confidence results in households gradually moving away from the cautious sentiment exhibited over the last year, the EY ITEM Club thinks there is a prospect of a decent consumer-led recovery.”
