In a surprise move, the UK’s economic growth has been revised upwards for the first quarter (Q1) of 2018.
Announcing the news on Friday 29 June 2018, the Office for National Statistics (ONS) said that growth for the three months to March was 0.2 per cent. This is up from the ONS’ previous estimate of 0.1 per cent.
The good news had an immediate impact on the value of the pound, which rose by 0.8 per cent against the US dollar as speculations surfaced that the Bank of England (BoE) might move to increase interest rates later in the year.
Earlier this month, the BoE decided to hold its base rate at 0.5 per cent. However, the Bank’s officials have indicated on more than one occasion that a rate rise is definitely on the cards for the near future.
At its most recent Monetary Policy Committee (MPC) meeting, the BoE hinted that it might move to hike rates as soon as August.
In the last week, leading economists have said that they are feeling “cautiously upbeat” about the short-term prospects of the economy.
However, concerns have been raised over the lacklustre pace of household spending, which rose by just 0.2 per cent quarter-on-quarter in Q1.
The ONS’s latest data reveals that, at the same time, the household savings ratio has fallen from 4.5 per cent to 4.1 per cent.
Critics have been keen to point out that this marks the third-lowest quarterly ratio since the ONS first began collecting records back in 1963.