UK GDP is expected to have expanded 0.7% q/q (2.8% y/y) in Q1, slightly higher than the 0.6% q/q rise in Q4-2014. Household consumption likely remained the key contributor to GDP growth, as it has been since the beginning of the UK recovery. Net trade is also likely to have made a marginally positive contribution, leading to a smaller trade deficit. Business investment may have remained under pressure due to election uncertainty; it fell 0.9% q/q in Q4. Whether we see a rebound in investment in Q2 will depend on how quickly the uncertainty fades after the election. Regarding GDP’s sectoral breakdown, the average services PMI for Q1 was higher than in Q4-2014, a signal that the recovery remains very much driven by the services sector. Industrial production is more subdued recently, especially the oil-extraction sector.
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