Slump in GDP puts new rate hikes in doubt

THe british economy grew at its slowest pace in five years between January and march – raising fresh doubts over whether the bank of england will hike interest rates next month.

Gross domestic product increased by only 0.1 per cent in the first quarter of the year, the Office for National Statistics said. This compares with an increase of 0.4 per cent in the final quarter of last year.

The latest figures show the weakest quarterly growth since the end of 2012 – and are worse than economists’ predictions that it would slow to 0.3 per cent.

Downing Street said the GDP figures were ‘clearly disappointing’ but insisted the UK’s economy remains ‘strong’.

many had predicted the beast from the east would hit britain’s economy hardest. However, the figures showed recent snowfalls had relatively little effect on growth.

The ONS said the slowdown in growth could be explained by ‘weaker manufacturing growth, subdued consumer-facing industries and construction output falling’.

The underwhelming figures mean it is less likely the bank of england’s monetary Policy Committee will increase interest rates above the current 0.5 per cent when it meets on may 10. The pound fell in the wake of the ONS data as traders revised their interest rate expectations.