Few signs of election uncertainty undermining recovery

Although GDP posted its smallest quarterly rise since 2012 in the first quarter of this year, we doubt that the economy is on the cusp of a renewed slowdown. The business surveys suggest that Q1’s 0.3% rise will be revised up and/or that quarterly growth will soon revert to rates of closer to 1%. Indeed, there are few signs that uncertainty about the result of Thursday’s general election is harming the economy. Admittedly, the hung parliament that looks highly likely could lead to a more prolonged period of political uncertainty – but even that need not damage the economy significantly. We continue to think that the economy this year will manage to grow at a similar rate to last year’s 2.8% growth.