Economy’s growth significantly slower in first quarter

Economy’s growth significantly slower in first quarter
Data just published shows growth was less than half of the previous quarter

The rate of growth in the UK economy slowed in the first three months of 2017.

The first estimate from the Office of National Statistics showed GDP rose 0.3% in January-March – the 17th consecutive quarter of growth.

However it was the lowest growth for a year, and significantly behind the revised estimate of 0.7% achieved in the final quarter of 2016.

Chris Williamson, chief business economist at IHS Markit, warned that the second quarter figure could be even lower.

He said: “A further lacklustre pace of growth is widely expected for the second quarter as political uncertainty and rising prices subdue demand. However, an improvement in recent survey data suggests that a further slowdown is by no means a sure thing.”

The slowdown was driven by the services sector, which accounts for 79% of the weighting for GDP calculations, dropping from 0.8% to 0.3%. Agriculture and production also saw 0.3% growth.

Manufacturing data was slightly stronger, showing 0.5% growth for the period.

Rain Newton-Smith, CBI Chief Economist, said the weakness was “particularly apparent in consumer-facing services”.

She said: “This chimes with signs that some of the recent supports to growth are softening. In particular, real wage growth has deteriorated, as inflation is now running up against earnings growth. With inflation set to continue rising, the pressure on household incomes will weigh on consumer spending.”

Click here to sign up to receive our new South West business news...