Lacklustre Q1 growth expected this week

The UK economy’s muted performance in contrast with strong global growth is expected to be thrown into sharp relief this week with City forecasts pointing to just a 0.3 per cent expansion in the first quarter.

The Office for National Statistics reports on Friday, and it could be the weakest pace of growth in a year, while some economists believe the figure could be even lower given the impact of last month’s snow and rainstorms on output.

It comes as the EY Item Club, the only independent forecaster that uses the Treasury’s own economic model, says in a report out today that “the UK economy continues to display a lack of momentum and shows little sign of breaking the pattern of uninspiring growth seen in 2017”.

Many economists see this week’s Q1 GDP figure as key to whether the Bank of England hoists interest rates by another 0.25 per cent in May following its quarter-point increase in November – the first in ten years.

Mark Carney, governor of the Bank of England, said last week that financial markets were wrong to assume a rise was certain following a recent run of lacklustre economic data.

However, it is seen as a finely balanced decision as UK inflation is still running comfortably above the Bank’s mid-term target of 2 per cent.

The EY Item Club’s Spring Forecast expects UK GDP to grow by 1.6 per cent in 2018 (a modest downgrade from 1.7 per cent in Club’s Winter Forecast), and then by an unchanged 1.7 per cent in 2019. 0 Mark Carney, governor of the Bank of England