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GDP up 0.5 per cent in Q1

The UK economy grew by 0.5 per cent in the first quarter of 2011 following a GDP decease of 0.5 per cent in the final quarter last year.

The Office for National Statistics says GDP is estimated to have returned to the level of Q3, 2010.

Schroders European economist Azad Zangana says: “When we strip out the ‘snow effect’, the economy has been suffering from stagflation over the past six months, suffering from high inflation and no growth in real terms.

“We expect the balance between growth and inflation to improve in the second half of the year, which will eventually prompt the Bank of England to raise interest rates, probably in August.”

Total services output increased by 0.9 per cent in Q1 2011, compared with a decrease of 0.6 per cent in the previous quarter.

The transport, storage and communication sectors enjoyed the biggest change in fortune, moving from a GDP fall of 1.7 per cent in the previous quarter to a 2.7 per cent increase in the first quarter of 2011.

Total production output rose 0.4 per cent in the first quarter, compared to a 0.8 per cent increase in the previous quarter. This growth was driven by a 1.1 per cent increase in manufacturing.

However, construction output slumped by 4.7 per cent in the first quarter following a 2.3 per cent fall in Q4 last year.

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  1. 0.5% of nothing is still nothing.

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