The Office for National Statistics (ONS) revised its GDP growth estimate for the fourth quarter of 2014 from 0.5% to 0.6%. That bumped up the overall 2014 figure from 2.6% to 2.8%, putting Britain further ahead of its G7 rivals. The latest survey of the manufacturing sector suggested the economy continued to pick up steam in March, while retail sales volumes (excluding fuel) were up by 5.1% year-on-year in January.
The government trumpeted the GDP figures and an uptick in household disposable income, and presented an open letter from 100 business chiefs, some ex-Labour supporters, who said the opposition would threaten Britain's recovery.
What the commentators said
Business investment was marginally down at the end of last year, and has fallen for two successive quarters following an upswing dating from 2012. In January, moreover, the services sector shrank by 0.2%, while the construction sector has also slowed.
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Still, consumption has been healthy and "in an encouraging contrast with the past", higher household spending "does not appear to have its roots in unsustainable borrowing", said Ferdinando Giugliano in the FT.
Indeed, consumers have kept paying down their borrowings, with household debt to GDP now at 93%, compared to a peak of 109%. With incomes set to rise, households will have further opportunities to get on top of their debt.
Rising purchasing power thanks to zero inflation and rising wages bodes well for consumption over the next few months. Fears that expectations of deflation could delay purchases have proved unfounded. Instead, consumers "are spending the windfall" created by low food and energy prices, said Scotia Bank's Alan Clarke. "People are clearly not deferring their spending plans."
Consumer confidence, unsurprisingly, is at a 12-year high. The upshot is that GDP should expand by 2.7% this year, reckoned IHS Global Insight's Howard Archer. A more important figure than the yearly one, however, may be the ONS's preliminary stab at the first-quarter GDP estimate, released just nine days before the election. Of course, there are several more weeks of claim and counter-claim to get through before then.
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