UK suffers steeper-than-expected slowdown in first quarter

There was a 'statistically significant&apos fall of 84,000 compared with the figure recorded in 2015 the ONS said

There was a 'statistically significant&apos fall of 84,000 compared with the figure recorded in 2015 the ONS said

The UK economy grew by just 0.2% in the first quarter of 2017, lower than an initial estimate of 0.3%, revised official figures show.

It follows growth of 0.7% in the fourth quarter of 2016 and means that the UK's growth slowdown - partly driven by rising inflation - is worse than first thought.

The service sector is the dominant term in the United Kingdom economy, accounting for 80% of economic activity.

The ONS said: "Consumer facing industries such as retail and accommodation fell and household spending slowed". But government spending and business services and finance grew even more slowly than in the previous estimate.

Although employment remains at a record high, the economy has lost a lot of its momentum of a year ago as the impact of the decision to leave the European Union has started to be felt.

"But stronger growth in the Eurozone should help United Kingdom exports and the post-referendum easing of austerity - particularly with regards to public investment - should offer some support to the economy through the hard period of Brexit negotiations". The recovering eurozone economy grew more than twice as fast as the United Kingdom over the same period, advancing 0.5%.

Britain's economy grew 1.8 per cent past year.

United Kingdom first-quarter GDP was revised down to 0.2% in the second estimate.

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While business investment picked up, growing by a better-than-expected 0.6 per cent on the quarter, net trade lopped 1.4 percentage points off the quarterly GDP growth rate after a strong expansion in late 2016.

However, households are now spending less because of rising prices, the ONS said.

"This is going to be a more challenging time for British households over the course of this year, real income growth - to use our terminology - will be negative".

Frances O'Grady, General Secretary of the Trades Union Congress, said of the latest GDP figures: "This is a very worrying sign of the squeeze that families are feeling".

The UK's inflation rate hit 2.7% in April - the highest figure since September 2013.

Deutsche Bank is also concerned, with United Kingdom strategist Oliver Harvey and chief economist Mark Wall writing on Wednesday: "In the short term, most reliable indicators of household spending point to a sharp slowdown".

The currency had been on a rising path to around $1.2995 in the morning before the 9.30am ONS release, but then fell around a half of a cent to $1.2947 as analysts pushed back their bets on an earlier rate rise from the Bank of England.

Last year, the economy grew by 2.2 per cent, but Chancellor Philip Hammond is expected to announce next month that GDP is forecast to fall modestly again this year to 1.6 or 1.7 per cent.

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