Growth halved as Beast from the East hit all major sectors, think tank warns
An influential think tank has predicted GDP growth slowed significantly in the first quarter.
UK growth is set to have halved in the first quarter as the Beast from the East impacted businesses across the country, according to an influential think tank.
The National Institute of Economic and Social Research (NIESR) estimates that gross domestic product (GDP) growth slowed to 0.2% in the first quarter of 2018, down from growth of 0.4% in the final quarter of last year.
The UK was hit with two snowstorms in March, with the so-called Beast from the East arriving in the first week, followed by the Mini Beast during the third week of the month.
The forecast comes after official figures separately on Wednesday showed manufacturing output declined unexpectedly in February.
The Office for National Statistics (ONS) said output from Britain’s factories fell 0.2% month-on-month; experts had predicted a rise for the sector.
Meanwhile, output from the construction sector was down by 1.6%, having fallen by 3.1% in January.
The ONS said it was difficult to quantify the impact of bad weather on the industry, but that poor conditions could have been responsible for the decline.
Retail sales also suffered in March as shoppers avoided the snow-covered high streets. Sales slumped by 10.1%, according to figures from accountancy firm BDO.
Fashion and furniture retailers were some of the worst affected, with sales falling by 12.7% and 13.2% respectively.
The retail sales balance from the Confederation of British Industry’s trades survey fell to -8 in March, down from +8 in the prior month, which the CBI attributed to the lengthy cold snap.
The data adds to economists’ mounting expectations for a sharp slowdown in GDP in the first quarter, although the Bank of England only expects the effects to be temporary.
Amit Kara, head of UK macroeconomic forecasting at NIESR, said the data should be interpreted with “some caution”, given forecasting errors made following extreme weather events in the past.
“Take for example the quarterly GDP growth for the final quarter of 2010, when the UK experienced a prolonged period of extreme cold weather,” Mr Kara said.
“The economy was initially expected to have shrunk by 0.5%, but subsequent data revisions show that the economy expanded by 0.1% over this period.”