Belfast Telegraph

GDP figures set to show slowdown for UK growth

The UK economy is expected to post a slowdown in growth when official gross domestic product (GDP) figures are published on Wednesday.

GDP is forecast to have eased back to 0.4% in the first quarter of 2016, down from 0.6% in the fourth quarter of last year, following lacklustre growth from the services, manufacturing and construction sectors.

A number of experts believe GDP could even deliver its weakest performance since the fourth quarter of 2014, dropping back to 0.3% for the the first three months of the year.

Mounting gloom over the global economy, coupled with concerns over Britain's forthcoming referendum on Europe and volatile commodity prices, have dealt a blow to business confidence.

It has left the Bank of England in no hurry to raise interest rates from 0.5%, where they have remained since March 2009.

Bank governor Mark Carney warned last week that uncertainty around the EU referendum was beginning to hamper economic growth.

He told the House of Lords economic affairs committee that risks posed by the EU referendum had ''the potential to reinforce existing vulnerabilities in relation to financial stability'', which include the UK's high current account deficit, the property market and market liquidity.

He said: ''Some elements of these risks may be beginning to manifest.''

Mr Carney also reaffirmed concerns raised by the Bank's Monetary Policy Committee earlier this month, which had seen ''some softening in growth during the first half of 2016'' due to uncertainty surrounding Britain's vote on the EU.

His comments came after the International Monetary Fund (IMF) downgraded its forecast for UK economic growth over fears of disruption if Britain leaves the EU on June 23.

The IMF scaled back its projection of UK economic growth for 2016 by 0.3 percentage points to 1.9% - marginally below the 2% forecast of the Government's Office for Budget Responsibility - but held its forecast for 2017 at 2.2%.

A series of industry surveys covering the manufacturing, construction and services sectors have pointed to a slowdown in GDP for the first quarter.

The latest Markit/CIPS services purchasing managers' index (PMI) said expansion for the first three months of 2016 was the weakest for three years.

Separate figures from the Office for National Statistics showed manufacturing output dropped 1.1% on the month in February, following a rise of 0.5% in January.

Construction output also fell 0.3% in February compared with the month before, according to the ONS, in a sign that firms were slowing spending ahead of the Brexit vote.

Howard Archer, chief European and UK economist at IHS Economics, said heightened uncertainty over the EU referendum will knock back growth to 0.3% for the first quarter.

He added: "In particular, t his is expected to weigh down on business investment and employment, and it may well also limit consumers' willingness to splash out on big-ticket items. Muted global growth and recent financial market volatility will also hamper UK economic activity in the near term at least."