United Kingdom economy suffers steeper slowdown in first quarter
- Author: Zachary Reyes May 25, 2017,
May 25, 2017, 13:23
Britain's economy performed better than expected in the wake of the Brexit vote past year but accelerating price rises - partly driven by the sharp fall in the pound since the vote - now appear to be taking their toll.
The downgrade was largely due to weakness in the services sector, which accounts for nearly 80% of economic output in the United Kingdom, rising just 0.2%, down from its initial estimate of 0.3% and its slowest since 2015.
"UK GDP growth slowed to 0.2% in Quarter 1 2017 as consumer facing industries such as retail and accommodation fell and household spending slowed".
Two weeks before the country votes in a general election, the Office for National Statistics said gross domestic product growth stood at 0.2 percent in the first three months of 2017 compared with the final quarter of past year.
The UK economy expanded less than previously estimated in the first quarter, the second estimate from the Office for National Statistics showed Thursday. "Construction and manufacturing also showed little growth, while business services and finance continued to grow strongly".
The ONS said overall investment was the biggest driver of growth in the first quarter, while net trade provided the biggest drag on output.
It means the powerhouse industry, which accounts for 78 per cent of the United Kingdom economy, slowed substantially from the 0.8 per cent growth seen between October and December past year.
Sterling's slump since the Brexit vote has bumped up the cost of the living as manufacturers and retailers pass down rising import prices to consumers. Total production increased by 0.1 percent but slower than the previous estimate of 0.3 percent.
Most economists polled by Reuters had forecast Britain's rate of growth would stay unchanged, which already represented a sharp slowdown from the rapid 0.7 percent pace achieved in the final three months of 2016.
Ian Stewart, chief economist at Deloitte, the business advisory firm, commented: "Just as expected higher inflation is squeezing incomes and spending".