Uncertainty will make growth figures doubly controversial

Experts divided on whether the economy has recovered from last year's snowfalls

Chancellor George Osborne and his Labour shadow, Ed Balls, face a crucial test of their respective claims to economic credibility tomorrow when the preliminary estimate for economic growth in the first quarter of this year is published by the Office for National Statistics (ONS).

Although the Government concedes that the economy faces a "choppy" recovery and that the recent performance has been disappointing, even allowing for the bad weather last winter, it will be hoping that its policies have indeed restored confidence to the battered economy. Labour, by contrast, will once again be seeking to prove that the Coalition is cutting "too deep and too fast".

The growth numbers come at a critical time politically, in the run-up to key local, Scottish and Welsh elections, plus a by-election at Leicester South and the referendum on the voting system. The Commons returns from its Easter recess today, and the economy is bound to feature during Prime Minister's Questions tomorrow.

The interpretation of the data is made more tricky by the shock fall in output in the final three months of 2010. The 0.5 per cent drop was due largely to weather effects, said the ONS, with the picture otherwise "broadly flat".

Most economists expect that much of the delayed output in those months will have been made up in January and February, whether it was people postponing hair appointments, say, or late deliveries of some vital component allowing production of some manufactured goods to be finished off.

However, some pre-Christmas shopping and going out may have been lost for ever. Thus a positive growth figure of 0.5 per cent will be seen as only just making up for the snow effects, implying an otherwise stagnant economy, and one slowing from the relatively strong growth in the middle months of 2010, which, argue Labour, was down to their fiscal stimulus.

Even so, it will not be a disaster for the Government. If the figure is much lower than that, even if positive, it will imply output is now lower than it was last autumn, and in effect points to the UK having suffered a "double dip" recession, and will be a much bigger embarrassment for ministers. A growth above 1 per cent means growth is picking up again, which will help the Government maintain its credibility and hit its fiscal targets. In the unlikely event of growth reaching 1.5 per cent, pressure on the Bank of England to raise interest rates will intensify, as it shows the margin of spare capacity in the economy is lower than was thought.

Economists differ more than usual in their forecasting, a task that has become more challenging in recent years as the GDP has delivered some surprises. At the bearish end of the range, analysts at JPMorgan suggest growth of 0.2 per cent, dragged lower by the appalling state of the construction industry. While only comprising 6 per cent of GDP, it has become increasingly volatile and proved capable of moving the growth figure in unexpected directions.

A more typical assessment is provided by Howard Archer, of Global Insight, who is looking for a 0.6 to 0.7 per cent reading. He said: "Construction output saw little if any growth in the first quarter, industrial production appears to have lost some momentum; net trade will have finally made a decent contribution; investment may well have improved; consumer spending likely saw pretty muted growth and it is possible that inventories made a negative contribution."

Thoughts are even now turning to the current quarter's growth, the data for which will be available in late July. Mr Archer added: "We expect growth to moderate appreciably as the fiscal squeeze increasingly kicks in from early April and consumers limit their spending in the face of serious headwinds. Specifically, we project GDP growth to moderate to 0.3 to 0.4 per cent quarter-on-quarter through the second to fourth quarters of 2011."

Cause for celebration

A combination of royal wedding memorabilia and the hot weather helped to lift London's West End over the Easter break, with an 18 per cent rise in customer numbers on Good Friday, against 2010.

The New West End Company, which represents 600 retailers on Bond Street, Oxford Street and Regent Street, reported that during the first three days of the weekend, two million people went shopping, a 4.1 per cent increase on 2010. Some 800,000 came on Friday, dubbed "Great Friday" by the retail sector. Hotels were also reportedly doing good trade.

Sue Amis, head of home buying for Debenhams, commented: "Our Oxford Street store has seen fantastic sales of royal wedding and Union Jack memorabilia recently, which will no doubt also continue as we approach the big day."

But Vicky Redwood, of Capital Economics, said: "The wedding is likely to add to the volatility of economic data over the next couple of months, making it even harder to judge the underlying recovery."

Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicReview: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
peopleJustin Bieber accuses papparrazzi of acting 'recklessly' after car crash
Life and Style
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Life and Style
Ukrainian Leonid Stadnik, 37, 2.59 meter (8,5 feet) tall, the world's tallest living man, waves as he poses for the media by the Chevrolet Tacuma car presented to him by President of Ukraine Viktor Yushchenko in Kiev on March 24, 2008.
newsPeasant farmer towered at almost 8'5'' - but shunned the limelight
Walter Matthau and Jack Lemmon in ‘The Front Page’, using an old tech typewriter
Life and Style
Could a robot sheepdog find itself working at Skipton Auction Mart?
techModel would allow robots to be programmed to control crowds and save people from burning buildings
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Suha Arraf’s film ‘Villa Touma’ (left) is set in Ramallah and all the actresses are Palestinian
Angel Di Maria poses with Louis van Gaal after signing for Manchester United
sportWinger arrives from Real Madrid and could make debut on Saturday
Arts and Entertainment
Kingston Road in Stockton is being filmed for the second series of Benefits Street
arts + entsFilming for Channel 4 has begun despite local complaints
Arts and Entertainment
Hooked on classical: cellist Rachael Lander began drinking to combat panic attacks
musicThe cellist Rachael Lander’s career was almost destroyed by alcohol she drank to fight stage fright. Now she’s playing with Elbow...
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Executive / Account Executive - SW London

£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

PA to CEO / Executive Secretary

£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Senior C# Developer (.NET, C#, JMS, TDD, Web API, MVC, integrat

£45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis