U.K. Gross Domestic Product (GDP) rose by 0.4% in the first quarter of 2008, unrevised from the previous estimate and down from 0.6% in the fourth quarter of 2007. The level of GDP in the first quarter of 2008 is now 2.5% higher than in the first quarter of 2007. Growth in the service industries was 0.5% in the first quarter, down from 0.7% in the previous quarter. Growth was weaker in all the main service categories, notably business services and finance. Only retail sales showed stronger growth. Household expenditure rose 1.3%, up from 0.1% in the previous quarter. Household expenditure is now 3.0% higher than in the first quarter of 2007. The trade deficit in real terms decreased from £11.6 billion in the fourth quarter of 2007 to £11.0 billion in the first quarter of 2008. Growth in exports of goods and services was flat, while growth in imports fell 0.6%. The UK GDP data suggests a mild slowdown in the first quarter of 2008, but certainly not recessionary as many had suggested. The lower rate of growth reported by the financial sector in the first quarter was offset by stronger consumer spending. Overall, although GDP growth fell short of the growth rate set last year, the GDP report suggests that the economy can sustain growth without requiring the Central Bank to cut the interest rate.
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