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Economic growth losing momentum as exports weaken

By John-Paul Ford Rojas

Published 29/05/2015

Growth was also hampered by a dismal performance from overseas trade
Growth was also hampered by a dismal performance from overseas trade

A slowdown in Britain's economic recovery at the start of the year was confirmed by official figures, scotching hopes that growth data would be revised upwards.

Gross domestic product (GDP) increased by 0.3% in the first three months of 2015, half of its rate in the fourth quarter of last year, and the worst performance since the end of 2012.

The figures from the Office for National Statistics (ONS) showed that the powerhouse services sector, representing more than three-quarters of UK output, had a more sluggish three months than first estimated. Growth was also hampered by a dismal performance from overseas trade, with the deficit widening from £9.6bn at the end of 2014 to £13.2bn in the first quarter.

The period saw a spike in imports as exports slowed.

Net trade acted as the biggest drag on the headline GDP figure since the third quarter of 2013.

Economists had hoped an earlier estimate of UK growth for the start of 2015 would be revised up to 0.4% after improved figures from the industrial production and construction sectors.

But data from the services sector - which has led the UK out of recession while other areas struggle - showed it grew by only 0.4% in the first quarter, its worst performance since the end of 2012.

ONS chief economist Joe Grice said: "The unchanged figure of 0.3% growth in GDP in the first quarter of 2015 reflects small upwards revisions to production and construction, offset by a downward revision to services.

"It confirms the picture of somewhat weaker growth in the first quarter than in recent ones. But no single quarter's figures should be given undue weight."

Household spending growth slowed down slightly to 0.5%, but has now posted increases for 15 consecutive quarters. Business investment fought back from a contraction in the fourth quarter to grow by 1.7%, reaching £45.7bn, its highest level since the second quarter of 2005. But growth measured as GDP per head - a measure which irons out the effect of a rising population - was only 0.1% in the first quarter.

It had increased by 2.2% over 2014, but its year-on-year growth in the first quarter of 2015 was just 1.7%. The UK's 2.8% overall GDP growth in 2014 had been the best among the G7's developed economies.

But the sluggish pace in the first quarter of this year has left the UK behind the troubled eurozone.

Belfast Telegraph

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