Today's GDP release: What's happening under the -0.3%?

Subscribe to Campaigning blog feeds


The downward adjustment to the second estimate of overall growth in the first quarter 2012 was disappointing to see. This was largely driven by weaker than previously estimated output in the construction and the non-manufacturing production sector.

This headline figures does not tell the whole story and below this sits a more nuanced picture – there are some positive signs that confidence may tentatively be increasing in the economy but also signs that reinforce the challenges the UK faces.

So what do the underlying stats tell us?

Some of the interesting news includes:

  • Business Investment grew by 3.6% in Q1 2012. Within this manufacturing investment grew 5.2% and non-manufacturing grew 3.4%.
  • The net trade position deteriorated from a deficit of £4 billion in Q4 2011 to £4.4 billion in Q1 2012.

The growth in business investment is a sign that UK companies are starting to increase confidence. It is early days yet but does this signal the beginning of the long-anticipated recovery of investment? Forecasters have been predicting investment levels to pick up for a while but at the same time the precise timing of this recovery has been continually pushed out.

Manufacturing investment has continued to show stronger growth than non-manufacturing investment. With the exception of Q2 2010, growth in manufacturing investment has remained stronger than other sectors since late 2009.

The deterioration in the net trade position in the first quarter was a result of both higher imports and slightly lower exports. Lower exports to the EU are worrying but not entirely surprising given current events and weak growth in the Eurozone but it is comforting to see exports to non-EU countries continuing to grow.

Ongoing challenges face UK companies, from difficulties accessing finance to the intensification of strains in the UK's major export markets in Europe. Despite the positive business investment stats, the process of rebalancing still has a long way to go.


This person has now left EEF. Please contact us on 0808 168 1874 or email us at if you have any questions.

Other articles from this author >
Online payments are not supported by your browser. Please choose an alternative browser or make payments through the 'Other payment options' on step 3.