UK’s quarterly growth slower than expected
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