U.K. Economy Grows Faster Than Previously Estimated at 0.4%

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Britain’s economy had more momentum than previously estimated in the first quarter.

Gross domestic product rose 0.4 percent, the Office for National Statistics said in London on Tuesday, revising its previous figure of 0.3 percent. A separate report showed the current account deficit narrowed to 26.5 billion pounds, or 5.8 percent of GDP.

The economy has grown for nine straight quarters, helped largely by domestic demand, though the recovery remains uneven with net trade continuing to act as a drag. As Greece’s debt crisis casting a pall over Europe, Chancellor of the Exchequer George Osborne said on Tuesday that the potential impact of a Greek exit from the euro area shouldn’t be underestimated.

The Bank of England has previously issued a warning about the current-account gap, saying in April that it could, “in adverse circumstances, trigger a deterioration in market sentiment.” The current account deficit amounted to 5.9 percent of GDP last year, the most since records began in 1948.

While the trade balance worsened in the first quarter, there were improvements in the balances on income. Revisions left the current-account deficit at 6.4 percent of GDP in the fourth quarter and a peak of 7.1 percent in the previous three months.

The pound rose against the dollar after the data were published, and traded at $1.5730 at 9:31 a.m. in London, down 0.1 percent from yesterday.

Trade Drag

Consumer spending rose 0.9 percent in the three months through March, and business investment grew 2 percent. Exports rose 0.4 percent and imports increased 2.3 percent. Net traded subtracted 0.6 percentage point from growth.

The upward revision to GDP was largely due to methodological changes in construction. Services, the largest part of the economy, grew an unrevised 0.4 percent.

The report also showed the saving ratio, the amount of disposable income households set aside rather than spend, fell to 4.9 percent from 5.9 percent. Real household disposable income rose 0.2 percent.

The compensation of employees fell 0.5 percent, the most since 2012. The fall was largely due weaker social-benefit contributions, though wages and salaries also declined.