UK’s economic growth slowed in first quarter

ECONOMIC growth slowed in the first quarter of the year, with the UK’s gross domestic product (GDP) up 0.4%.

This followed a 0.6% rise in the fourth quarter of 2015, although the slowdown was expected because of difficulties in the construction sector and the uncertainty caused by the EU referendum.

The June 23 vote is also forecast to have an impact on the second-quarter GDP figures.

Stephanie Wall, senior policy and patron advisor at the Greater Birmingham Chambers of Commerce, said local manufacturers were still “buoyant” over their futures.

“The slowdown in GDP growth is not surprising, given the context of a slowing global economy and uncertainty around the EU Referendum,” she said.

“In spite of slowing growth, it is great to see that our manufacturers are still feeling buoyant, after a particularly gloomy Q4, and willing to increase their investment intentions.  This is exactly what we need to see if we are to improve productivity in the Midlands and drive forwards the Midlands Engine.”

Chris Williamson, chief economist at Markit, warned that “key indicators point to a further deterioration in the second quarter”.

He said: “The official release was in line with expectations and corroborates survey evidence showing a similar deterioration. However, the higher-frequency monthly PMI data also highlight how the slowdown gathered pace significantly after a reasonably solid January, suggesting that the economy started the second quarter on the back foot.

“Uncertainty about the economic outlook appears to have intensified ahead of the EU referendum, and the danger is that this will cause a lull in businesses decision making as the June vote draws closer, which will in turn reduce business spending, investment and hiring in the second quarter.”