NIESR estimates 0.7% growth for UK for Q1

”NIESR

Influential think tank, the National Institute of Economic and Social Research (NIESR), has today suggested the UK economy recovered in the first quarter of the year after bad weather conditions led to a shock contraction in the final quarter of last year.

The economy contracted by 0.5% in the October to December period after the month of December was the coldest for more than a century.

However, the NIESR believes the economy grew by 0.7% in the January to March period - the actual figure will be confirmed by the Office for National Statistics (ONS) on 27 April.

The Institute comments: “This strong figure for the first quarter of this year is flattered by the economic impact of the adverse weather in the final quarter of last year.

“The underlying growth rate is weak. The average rate of growth in the final quarter of last year and first quarter of this year was 0.1 percent,” it added.

The first official estimate of Q1 GDP is due on April 27.

However, the think tank’s forecast follows February industrial output data, which has led some economists to believe first quarter growth could be slower than originally forecast.

The Bank of England’s Monetary Policy Committee has commenced its two-day rate setting meeting today and it continues to be presented with a dilemma.

Despite pressure to lift interest rates to combat stubbornly high inflation, the central bank will be reluctant at this stage to lift rates when the recovery appears to be sluggish.

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