Growth slows to 0.2% as families cut spending

THE inflationary squeeze on household spending has triggered a sharper slowdown in growth than previously feared.

The economy grew by 0.2 per cent in the first three months of the year, according to the Office of National Statistics – down from its previous estimate of 0.3 per cent. This follows growth of 0.7 per cent in the final three months of last year.

The ONS reported that firms invested 0.6 per cent more in their businesses in the

first three months of the year, confounding predictions they would be paralysed with fear after the Brexit vote.

It also said business services, such as consultants and accountants, and the financial sector ‘continued to grow strongly’. But in a blow to Theresa May ahead of the general election, the ONS warned that house- holds are cutting spending as the rising cost of living eats into wages. Last month annual inflation hit 2.7 per cent, its highest level in nearly four years.

This has put the brakes on the economy , as restaurants, shops and hotels have been hit. The ONS said: ‘This was partly due to rising prices.’