UK GDP growth fell back to earth with a bang in the first quarter

Emma Haslett
Follow Emma
Revellers hide from rain under Union Jac
Economic growth was decidedly soggy in the first quarter (Source: Getty)

Having looked decidedly encouraging at the end of last year, it looks like the UK economy fell back to earth with a bang in the first quarter of 2017, after official figures suggested GDP growth has fallen to its slowest in a year.

Figrues published by the Office for National Statistics (ONS) showed UK growth fell to 0.3 per cent in the first three months of the year, less than the 0.4 per cent expected and down from 0.7 per cent.

Year-on-year growth fell to 2.1 per cent, against expectations of 2.2 per cent - although it was up from 1.9 per cent in the previous quarter.

The ONS said the weak growth was driven by falls in retail, which shrank by 0.08 per cent in the first quarter, as well as the rental and accommodation sectors, which fell 0.04 per cent.

Having edged tantalisingly close to $1.30 against the dollar in early trading, the pound lost some of its gains on the news, falling as low as $1.2915, 0.1 per cent higher. Meanwhile, it was flat against the euro at €1.1866.

However, economists suggested the figures were more a blip than a trend.

Read more: Is the economic case for Scottish independence all but dead?

“The long-awaited slowdown is finally coming but I’d be wary of over-interpreting today’s numbers," said Ian Stewart, chief economist at Deloitte.

"Quarterly GDP growth is choppy and prone to revision. Inflation will continue to squeeze the consumer but the outlook for manufacturing and exports has brightened. Growth is slowing, but this looks like a cooling, not collapse, in UK activity.”

Split down the middle

"With the country already split down the middle on the Brexit vote, slowing growth shouldn’t be a surprise, but this won’t cause pandemonium among economists," added Alex Lydall, head of dealing at Foenix Partners.

"While in the short term declining retail sales numbers are a concern, along with wages not increasing at the rate inflation is, it has to be noted that pre-Brexit figures were actually similar levels in 2016.

"If we consider the long road ahead of Brexit negotiations, it is a gloomy forecast, but these are the cards that have been dealt and it appears from recent polls, Theresa May is set to gain a majority vote come 8 June. Assuming this occurs, complications should (in theory) be minimal as Mrs May is surely the most qualified of the candidates."

Read more: Axe tarriffs to give the UK a post-Brexit boost say wonks

Related articles