UK economic growth slows to 0.3 per cent in the first quarter of 2015

Jessica Morris
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UK GDP grew by 0.3 per cent in the first quarter of 2015 (Source: Getty)

The last piece of key economic data spun out ahead of the General Election on May 7 has shown the economy slowed by more than expected in the first quarter.

The Office for National Statistics said today the economy grew by 0.3 per cent in the first three months of this year, which was below City economists' expectations of 0.5 per cent, and down from 0.6 per cent in the last quarter of 2014.

The pound fell against the dollar after the release.

Three of the main industrial groups decreased, as construction fell by 1.6 per cent, production by 0.1 per cent and agriculture by 0.2 per cent. Meanwhile, the dominant services sector posted growth of just 0.5 per cent.

Prime Minister David Cameron said: "Our economy is growing, growing at a rate that many other European countries frankly would give their eye teeth for. These are one quarter’s figures.

"But they remind us, a timely reminder, that you cannot take recovery for granted. You take your eye off the ball on reducing the deficit that would be bad for growth, you take your eye off the ball in being pro-business that would damage growth."

(Source: ONS)

Commentators have said today's figure will put pressure of Cameron ahead of the General Election, as the Tories have fought a large proportion of their campaign on their ability to safeguard the economic recovery.

"Given the Conservatives and Liberal Democrats are hoping that many undecided voters will ultimately decide to vote for them due to their management of the economy, this marked slowdown in growth is particularly unwelcome news coming just over a week before the General Election," said Howard Archer, chief economist at IHS.

It's worth noting that today's figure could be revised at a later date, as it's partly an estimate, and based on half of the data that will ultimately be used by the ONS - for instance, we're still waiting on official data for net trade as well as business investment.

"We should also treat the preliminary reading with caution. It is based on only partial information for the quarter, and in particular a lack of hard data for March, a month in which the Markit/CIPS PMI surveys indicated an upturn in the pace of growth," Chris Williamson, chief economist at Markit, said.

“The surveys tend to provide a good indication of the underlying pace of economic growth, and have been running at a level consistent with a 0.7% increase in GDP in recent months."

"The surveys therefore suggest that the first quarter GDP data are likely to be revised higher, and also that growth should bounce back in the second quarter."

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