UK’s quar­terly growth slower than ex­pected

New Straits Times - - Business -

LONDON: The United King­dom econ­omy slowed more sharply than ini­tially es­ti­mated in the first quar­ter as shop­pers flagged and trade dragged on growth.

Gross do­mes­tic prod­uct (GDP) rose 0.2 per cent, less than the 0.3 per cent pub­lished late last month and down from 0.7 per cent at the end of last year. Growth in ser­vices, the big­gest part of the econ­omy, and pro­duc­tion were both re­vised down com­pared with the ini­tial es­ti­mate.

The re­port from the Of­fice for Na­tional Statis­tics also showed that ex­ports fell 1.6 per cent and net trade knocked 1.4 per­cent­age points off GDP, equalling a record drag. Con­sumer spend­ing weak­ened, with house­hold ac­tiv­ity adding the least to the econ­omy since 2014.

The sharper-than-an­tic­i­pated slow­down is an­other sign that Brexit is hit­ting the econ­omy as ac­cel­er­at­ing in­fla­tion cou­pled with muted wage growth puts the squeeze on house­holds.

Economists fore­cast lit­tle pickup in the pace of quar­terly ex­pan­sion through the rest of the year, and the de­te­ri­o­rat­ing out­look is re­flected in the Bloomberg Brexit Barom­e­ter, which is now at its weak­est since Novem­ber.

The poor per­for­mance of trade in the first quar­ter given ster­ling’s de­pre­ci­a­tion re­in­forces the view that while it may be help­ing ex­porters’ mar­gins, there’s been lim­ited im­pact on the broader eco­nomic pic­ture.

Bank of Eng­land gover­nor Mark Car­ney has warned of a “chal­leng­ing time” ahead for con­sumers, and a sur­vey this week showed that an Easter-driven pickup in re­tail sales last month hasn’t been sus­tained into this month. Bloomberg

Mark Car­ney

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