While the UK government was quick to take the plaudits for the Q1 showing (+0.7% q/q), let’s not forget that it has a lot to do with a surge in exports amid a frontloading of shipments before Trump’s initial reciprocal tariffs struck. As such, we are to see that effect reverse in Q2 alongside softer conditions on the manufacturing side at the balance.
The estimate is that we should see Q2 GDP still reflect marginal growth of +0.1% q/q. However, it won’t be anything for the UK government to shout about. And for the BOE, that will reinforce their more cautious stance in easing monetary policy as they still have to keep one eye on the inflation meter.
Among analyst estimates, Barclays is expecting a +0.2% q/q reading (backed by a +0.2% m/m showing in June) provided that there are no revisions to the readings in the months before. The firm notes that the better showing in Q1 owes much to temporary factors, “including US demand frontloading and the April stamp duty change”.
Meanwhile, Morgan Stanley is estimating the headline estimate to flatline at 0.0% q/q. The firm does note that there is modest upside risk of a +0.1% q/q reading though but assumes a slight downward revision to May data and a moderate pickup in June activity.
