ECONOMIC OUTLOOK

LAST Friday finished the week with some positive news from the US, where a revision to GDP data showed that the economy grew by an annualised rate of 1.2% in the first quarter, better than originally thought.

Earlier in the week it was revealed that the UK economy slowed more than thought at the start of the year, with growth of just 0.2% in the first quarter lower than the earlier estimate of 0.3%.

Office for National Statistics (ONS) data showed that consumer-facing businesses including retailers and hotels suffered from reduced household spending.

The figures are the first real evidence of consumer-led weakness in the economy since the Brexit vote.

Britain’s economic momentum is widely forecast to slow this year as consumers feel the pinch from higher inflation.

With prices rising at a four-year high of 2.7% last month, real wage growth is negative for the first time in two and a half years.

Retail sales growth has been flat in May after a strong performance in April, according to the Confederation of British Industry (CBI) Distributive Trades survey.

The survey also found retailers increasing prices at their fastest rate for six years.

UK public sector borrowing in April was significantly higher than forecast, although borrowing figures for the 2016/17 financial year were revised down.

Public sector net borrowing was £48.7bn for the year ending March, lower than previously estimated after tax receipts improved.

But the April deficit was £10.4bn, up £1.2bn from the same month last year and the highest April borrowing since 2014.

Sam Tombs at Pantheon Macroeconomics said April’s borrowing “suggest that the slowdown in GDP growth in the first quarter won’t be just a blip”.

Meanwhile, asking prices for homes have hit a new peak, despite transaction data showing the housing market is slowing.

According to property website Rightmove, the average asking price rose 1.2% in the four weeks to 13 May to a record of more than £317,000.

The research follows Land Registry data showing house prices were down 0.6% in March with a 1.5% decline in London.

Russell Quirk, CEO of online estate agent eMoov, said the Rightmove figures suggested homeowners were “sitting tight despite a marginal cool in market demand and are yet to reduce their price expectations”.

Separate data showed the number of mortgage approvals fell last month while borrowing on credit cards rose. The British Bankers’ Association said 40,800 mortgages were approved in April, down from 41,100 in March and 42,200 in February.

Gross mortgage borrowing totalled £13.4bn in April, up from £13.2bn in March, while net mortgage borrowing was 2.4% higher than a year ago.