Instant view - Q4 final GDP revised up to 0.4 percent

LONDON (Reuters) - The economy came out of recession in the fourth quarter of last year with more momentum than expected, official data showed on Tuesday.

Separate figures showed the current account deficit narrowed more than expected over the quarter.



“On balance they’re a positive surprise ... The economy left 2009 with a little bit more momentum than we thought.”

“Looking ahead, the first quarter looks uncertain from the point of view of poor weather in January and what seems to be an underlying slowdown in the housing market, but we are still pencilling in a positive GDP figure.”

“It suggests there is still some underlying momentum to the recovery, and therefore despite negative factors weighing down on UK output during the first few months of the year, that the net position is probably that the economy continues to expand, but it remains the case that the economy is fragile, and still requires a large degree of policy accommodation to enable it to gain traction.”


“The further upward revision to GDP growth ... suggests that the economy exited recession with a bit more momentum than previously thought at the end of last year. As expected after last week’s business investment numbers, the change came from a smaller drop in overall investment.”

“But there are some less encouraging aspects to the figures too. Growth in Q4 was still heavily reliant on public spending and inventories, both areas which are likely to be weaker in coming quarters.”

“Overall, some welcome news. But the big picture of a fragile and unbalanced recovery is unchanged.”


“It is obviously a very welcome development that growth has been revised up, and it suggests that the economy ended last year with a little bit more momentum than previously thought.”

“But it still doesn’t fundamentally change our view that recovery is likely to be gradual and bumpy going forward.”

“We still think the economy is going to struggle to grow by more than one percent this year ... I think it’s highly likely that growth is going to slow in the first quarter this year, partly due to the weather contracting retail sales. I think gradual recovery remains intact, but I think gradual is the key word.”


“There is no dramatic change on the output side. I think what is more interesting on the expenditure data is that we have got a much stronger domestic demand out turn ... so you have got a bigger drag coming from net trade.”

“So the headline is better ... but there is not really much evidence of any rebalancing. There is still a huge drag from investment and net trade wipes 0.4 percentage points of GDP.”

“The surveys suggest that growth will be sustained at a similar pace (in Q1). So I think the risks of a double dip are fairly modest ... but I think there are still some significant headwinds.”


“I think that’s completely expected ... There’s been daylight between the surveys and GDP ... It reinforces the case that PMI is working as a strong signal, growth is recovering, and those surveys have powered on since then.”

“We should be bracing for decent numbers in the first half of the year.”