National Statistics first estimate for GDP in the first three months of the years was published today. The fall in output - at 1.9% - was greater than most analysts were expecting and the biggest drop in GDP for three decades. The Chancellor's expectations on Wednesday, that the economy would contract by 1.6% in the first quarter have also been dashed. Further to our comments earlier this week, an even bigger bounce in economic growth will be needed in the coming quarters if we are to get anywhere close to Chancellor's forecasts.
The falls in output were widespread, but the biggest contraction, at 6.2%, was felt in manufacturing. The numbers for the service sector paint a none-too-rosy picture either - transport, storage and communications was down nearly 3% and business services output dropped by almost 2%, leaving service sector output down by 1.2% overall.
Early indicators of activity for the second quarter suggest conditions might be stabilising, but further falls in output are nevertheless likely in the next few quarters. Given the pace of the decline in the economy in the first quarter, the measures put forward to support business in the Budget look even less generous if manufacturing is to play a role is getting us out of the doldrums and on track for better balanced growth in future.