Date: 4th May 2021
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the first estimates for GDP for 2021Q1:- Eurozone GDP fell by 0.6% (QOQ) in 2021Q1, following the 0.7% decline in 2020Q4, thus falling into recession as defined as two successive quarterly falls in GDP.
- Within the Eurozone, there were large divergencies. German GDP fell back 1.7% and Italian and Spanish GDP also declined. But French GDP picked up by 0.4%.
- Non-Eurozone, 'anti-lockdown' Sweden posted a GDP increase of 1.1% in 2021Q1.
- US GDP grew by a much-as-expected 6.4% (annualised rate, 1.6% (QOQ)) in 2021Q1, supported by very accommodative fiscal and monetary policies.
- The Fed maintained its accommodative monetary policies at its last policy-making meeting (27-28 April).
- In a speech to Congress on 28 April President Biden set out his plans for $2.3tn of investment spending (the 'American Jobs Plan') and $1.8tn of spending for the 'American Families Plan'. These plans are in addition to the $1.9tn 'American Rescue Plan', agreed in March. President Biden proposes (part) funding the plans by tax increases on the 'wealthy' and corporations.
- China's GDP rose by a record 18.3% (YOY) in 2020Q1, though the data were distorted by the annual comparison with 2020Q1, when GDP fell by 6.8% (YOY).
- The first estimates for UK GDP for 2021Q1 will be released on 12 May.
- The MPC is not expected to make any major changes to policy at its May meeting (announcement 6 May), though there are expectations that the pace of QE will be slowed. It is expected the Bank will revise its GDP forecasts higher.
- SMMT data suggested car production improved modestly in March.
- According to the Nationwide, house prices rebounded by 2.1% (MOM) in April, to be 7.1% higher YOY.
- The public sector deficit per person in England was £91. In other words, the UK government spent £91 more per person in England than revenue raised per person.
- The public sector deficit per person in Scotland was £2,543 (£2,452 higher than in England; spending was £1,986 higher, whilst revenues were £466 lower).
- The equivalent deficit data were £4,412 for Wales (£4,321 higher than in England; spending was £1,167 higher, whilst revenues were £3,154 lower) and £5,118 for Northern Ireland (£5,027 higher than in England; spending was £2,317 higher, whilst revenues were £2,710 lower).
- Public sector net borrowing (the PSNB) was 1.8% of GDP in the UK in FY2018, but the deficits of the four constituent nations of the UK varied substantially. Allocating debt interest spending and all international and defence spending evenly across the UK population suggested that England ran a deficit of just 0.3% of GDP, while Scotland had a deficit of 7.7% of GDP, Wales of 17.9% of GDP and Northern Ireland of 19.0% of GDP.
- The Institute of Government noted that since FY2018, the fiscal position of the UK had deteriorated significantly as a result of the Covid-19 pandemic.
- It was announced on 28 April that the European Parliament had voted in favour of granting its consent to the UK-EU Trade and Cooperation Agreement (TCA). The consent decision was adopted by 660 votes for, five against and 32 abstentions.
Press enquiries:
Arbuthnot Banking Group PLC:
Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon
Maitland:
Sam Cartwright
020 7379 4415
arbuthnot@maitland.co.uk
Attachments
- Original document
- Permalink
Disclaimer
Arbuthnot Banking Group plc published this content on 04 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2021 09:34:06 UTC.