UK’s economic growth revised up

The UK economy grew faster than previously estimated in the first three months of the year, according to new figures.

The Office for National Statistics (ONS) said the economy grew by 0.4% in the quarter, compared with an earlier estimate of 0.3%.

Growth was boosted by a better performance from the construction industry than previously estimated.

On an annual basis, the economy grew by 2.9% from the first quarter of 2014, up from a previous estimate of 2.4%. The latest revision is the third estimate for the period.

For 2014 as a whole, economic growth was revised up to 3% from 2.8%. That marked the fastest rate of economic growth since 2006.

The ONS figures showed household disposable income grew by 4.5% year-on-year, the fastest annual pace since the second quarter of 2001.

Earlier this month, the ONS said construction output in the UK was 0.2% lower in the first quarter, rather than 1.1% lower as previously estimated.

Chief economist at ONS, Joe Grice said. ‘The slight upward revision to growth in the first quarter of 2015 is down largely to the recently announced new methods to measure construction output.’

Quarterly growth in services output was left unrevised at 0.4%.

Howard Archer, chief UK and European economist at IHS Global Insight, said economic growth was likely to have accelerated in the three months to June as the uncertainty caused by the general election in May subsided, the BBC reports.

Separate figures from the ONS showed the UK’s current account deficit was £26.55bn in the first three months of the year, the equivalent to 5.8% of GDP.

The deficit was down from an upwardly revised estimate of £28.93bn in the final quarter of 2014, but Mr Archer said that the deficit remained ‘worryingly high’.

John Longworth, director-general of the British Chambers of Commerce, warned the current account deficit was “as big of a risk to the UK’s future prosperity as the Eurozone crisis or other international shocks” adding it was ‘high time this stark fact is recognised’.

‘The size and persistence of the UK’s current account deficit make us hugely vulnerable to external shocks, unexpected shifts in market sentiment, and unwelcome downgrades to our credit rating.’