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First-quarter GDP growth confirmed at 0.4%

Published 26/05/2016

Business investment, construction, manufacturing and exports have all declined, an expert said
Business investment, construction, manufacturing and exports have all declined, an expert said

GDP growth for the first quarter has been confirmed at 0.4%, official figures show.

Data from the Office for National Statistics also showed that annual growth for the UK economy has been revised down 0.1% to 2%.

The quarterly figures represent the slowest pace of growth since the third quarter of last year.

Chris Williamson, chief economist at Markit, said: "The data show an economy reliant on consumer spending to sustain growth, with business investment, construction, manufacturing and exports all in decline."

Mr Williamson warned that growth in the second quarter could show the British economy "slowing to near-stagnation" and flagged global factors hitting the UK.

He added: "It is tempting but wrong to assign all of the blame for the slowdown on 'Brexit' uncertainty.

"While business survey evidence indicates that rising uncertainty has caused growth to weaken in recent months, there has also been an underlying cooling in the economy which has been driven by slower global economic growth, which has slumped to the weakest for over three years in recent months."

Britain's dominant service sector grew 0.6%, but industrial output fell 0.4% and construction dropped 1%. Manufacturing also declined by 0.4%.

Economists have warned that if sluggish growth continues, the Bank of England could be forced to consider a cut to interest rates.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "We believe there is a growing risk that the economy may not bounce back that well after a vote to stay in the EU, as there is the danger that caution among businesses and consumers could persist following a likely very weak second quarter.

"If this is the case, some Monetary Policy Committee members could become increasingly tempted to trim interest rates."

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