ONS: Recovery isn't just being fuelled by shoppers, honest

Investment and exports are up. Consumer spending and imports are down. Could this be the fabled economic rebalancing?

by Rachel Savage
Last Updated: 14 Mar 2014

Fourth quarter GDP growth last year was 0.7% after all, the Office for National Statistics confirmed today. Nothing new there then. What was a bit more exciting, though, was the news that investment and exports surged ahead of expectations.

Business investment rose by 2.4%, or £800m, in the last three months of 2013, above the forecast of 1.3%. It was also 8.5% higher than 2012. The trade deficit is looking a bit healthier too. It fell by £1.6bn to £6.6bn, as exports rose 0.4% and imports fell 0.9% (although the latter is perhaps not such good news). Growth for the whole of 2013 was also trimmed from 1.9% to 1.8%.

However, consumer spending lagged a bit more than expected, up 0.4% in the quarter instead of the 0.6% forecasted. In a way, that's actually a good thing: there have been worries that the recovery has been too fuelled by consumer spending. Because wages haven't really risen in real-terms for ages, that meant people were borrowing more - putting us back to where we started. So the fact that growth isn't being fuelled by shopaholics is, for once, pretty positive (unless you're a retailer).

More good figures came from the CBI, which reported output volumes grew 32% in the three months to February, up 2% from the quarter to January and the fastest expansion since they started the Growth Indicator survey in 2003. People were grumbling a bit after unemployment crept up to 7.2% at the end of 2013, so these latest figures should shoo off at least some of the endless doom-mongering.


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