The economy is expected to grow by 0.4 per cent in the first quarter of 2010 according to a respected think tank. On the back of the OECD’s rosy picture of British economic growth, it represents good news for Labour and suggests that the official GDP estimates, due on April 23rd, will vindicate the Government’s approach to the recession.
The National Institute of Economic and Social Research suggest that “weak growth continues” despite the adverse weather at the start of the year and VAT returning to 17.5 per cent in January:
“Our monthly estimates of GDP suggest that output grew by 0.4 per cent in the three months ending in March after a similar figure for the three months ending in February. These data reflect a dip in output in January which we associate the cold weather. Given this dip in January and the fact that the growth rate was achieved despite the rise in the VAT rate, the underlying rate of growth of the economy is probably greater than 0.4 per cent.”
The release comes on the back of an OECD report yesterday, which showed that the UK was “poised for rapid expansion” and would grow by 2.0 per cent at an annualised rate in the first quarter of 2010 and by 3.1 per cent in the second quarter, the second highest in the G7 behind Canada.