Services, which account for three quarters of the economy, grew at 0.9pc, their strongest rate since 2006. Indeed when you add in industrial output then 93pc of the economy expanded at 0.8pc in the first quarter.
The black mark was construction where output fell 4.7pc, which dragged back GDP growth to 0.5pc. But as economists such as Simon Ward at Henderson pointed out, that poor result reflects the after effects of December's weather-related disruption. More recent monthly data suggest a rebound in February and March.
So the economic wrist slashers should put away the razor blades. Things are bad but we're at least still on the same bumpy road to recovery with a fundable debt position thanks to a credible policy of fiscal consolidation.
There was certainly nothing in Wednesday's figures, which may yet be revised upwards, to suggest the hawks on the Monetary Policy Committee are wrong to carry on calling for a tightening in monetary policy.
And the evidence from the real economy on Wednesday did nothing to dissuade me either. Whether it was Primark owner Associated British Foods (ABF), Carpetright or Premier Foods, the common theme from all their trading updates and results was one thing - inflation.
ABF is particularly interesting because not only does it have cheap clothes manufactured abroad, it is also involved in food production. It is seeing not only steep commodity inflation in its food production, but 20pc-25pc labour cost inflation in markets producing the clothes it sells in Primark. It will absorb these costs and sacrifice margin to maintain its volumes and gain market share. Other retailers won't be able to follow suit as the inflationary bubble pushing through the economy continues to build unchecked.
damian.reece@telegraph.co.uk
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