🥇 First rule of investing? Know when to save! Up to 55% off InvestingPro before BLACK FRIDAYCLAIM SALE

Britain's economic recovery seen speeding up in first quarter

Published 29/04/2014, 00:21

By William Schomberg

LONDON (Reuters) - Britain's economy is likely to have come within a whisker of finally recovering its pre-recession size when data is released on Tuesday, buoying Prime Minister David Cameron little more than a year before a national election.

Gross domestic product figures, due at 0930 BST, are also likely to show Britain notched up its fastest economic growth in nearly four years in the first three months of 2014.

Britain's economy has bounced back strongly over the past 12 months and is it expected to grow more quickly than any other Group of Seven nation this year.

But it has taken longer than many other countries to shake off the effects of the financial crisis, partly because of the size of its banking sector but also, critics of the government say, because it opted for sharp curbs on public spending.

At the end of last year, the economy was 1.4 percent smaller than at its peak in the first quarter of 2008.

Gross domestic product probably expanded by 0.9 percent in the first three months of this year from the fourth quarter of 2013, when the economy grew by 0.7 percent, according to a Reuters poll of economists.

In year-on-year terms, growth is also expected to have picked up speed to hit 3.2 percent, compared with 2.7 percent in the fourth quarter.

Cameron and his finance minister George Osborne are trying to convince voters that their Conservative Party should be returned to power in the May 2015 elections to carry on restoring Britain to financial health.

The opposition Labour party has switched its line of attack away from the government's failure to revive growth to what it calls the cost of living crisis.

Britain's population has risen strongly since the financial crisis, meaning that output per head is still well below pre-crisis levels. A nearly six-year run of declining wages compared with inflation is only just starting to level out.

Nonetheless, British households are feeling increasingly upbeat about their finances.

Consumer confidence in April hit its highest level since August 2007, helped in particular by rising house prices as well as by higher earnings, according to a survey published on Tuesday by polling firm YouGov and the Centre for Economics and Business Research, a consultancy.

"Consumer confidence grew at a sluggish rate during the first quarter of 2014, but April's figures suggest that confidence is set to make great strides over the summer," Charles Davis, CEBR director, said.

Despite turnaround in Britain's economy, the Bank of England has signalled that it is in no rush to raise interest rates. Its stance has been helped by the lowest consumer inflation rate in four years.

The Bank has welcomed a long-awaited pickup in business investment as a sign that the economic recovery might be able to reduce its reliance on unsustainable consumer spending.

(Editing by Robin Pomeroy)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.