Belfast Telegraph

GDP growth falls to 0.4% as global chill hampers UK

By Staff Reporter

Official figures have confirmed GDP growth of 0.4% for the first quarter of the year.

Annual growth for the UK economy was also revised down 0.1% to 2% in the data from the Office for National Statistics.

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

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

Mr Williamson also warned that the economy could slow to "near-stagnation" in second quarter amid an uncertain global picture.

"It is tempting but wrong to assign all of the blame for the slowdown on Brexit uncertainty," he added.

"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 by 0.6% during the first quarter, but industrial output fell 0.4% and construction dropped 1%. Manufacturing also declined by 0.4%.

Economists warned that if sluggish growth continued, the Bank of England could be forced to consider cutting 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 (MPC) members could become increasingly tempted to trim interest rates."

Bank of England MPC member Kristin Forbes last week told the Belfast Telegraph that referendum uncertainty could be behind some of the "softening" economic data.

She said: "If I'm a company, and I know that in a month there will be a vote which might change my input costs and who I am selling to, it makes sense to delay having new workers, starting a new project or agreeing to a big salary increase until after that uncertainty.

Belfast Telegraph