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UK growth hit by trade deficit and services slowdown | UK growth hit by trade deficit and services slowdown |
(35 minutes later) | |
The UK economy grew 0.3% in the first quarter of 2015, official figure have confirmed, with growth hit by rising imports and a service sector slowdown. | The UK economy grew 0.3% in the first quarter of 2015, official figure have confirmed, with growth hit by rising imports and a service sector slowdown. |
The 0.3% growth figure marked a sharp slowdown from the 0.6% rate seen in the final three months of last year. | The 0.3% growth figure marked a sharp slowdown from the 0.6% rate seen in the final three months of last year. |
The services sector, which represents three-quarters of UK output, grew by 0.4%, the weakest rate since 2012. | The services sector, which represents three-quarters of UK output, grew by 0.4%, the weakest rate since 2012. |
In addition, exports fell by 0.3% in the first quarter of the year while imports increased by 2.3%. | |
The trade deficit widened from £9.6bn in the fourth quarter of 2014 to £13.2bn in the first quarter, and the Office for National Statistics (ONS) said net trade knocked 0.9 percentage points off the GDP rate. | |
The lack of revision to the 0.3% growth figure came as a surprise as most analysts had expected the ONS's initial estimate to be revised up to 0.4%. | |
The Bank of England has said that it expects the first quarter growth rate to be revised up to 0.5% once final data is available. | The Bank of England has said that it expects the first quarter growth rate to be revised up to 0.5% once final data is available. |
Momentum 'understated' | Momentum 'understated' |
The ONS figure confirms that the first three months of the year saw the lowest quarterly growth for two years, after strong growth in 2014. | The ONS figure confirms that the first three months of the year saw the lowest quarterly growth for two years, after strong growth in 2014. |
However, David Kern, chief economist at British Chambers of Commerce, said the GDP figures "understates the true momentum in the economy". | |
"When you dive into the detail, there is a mixed picture", he said, as production and construction figures have been revised up, while the trade deficit has widened. | "When you dive into the detail, there is a mixed picture", he said, as production and construction figures have been revised up, while the trade deficit has widened. |
David Tinsley, an economist at UBS, said the unrevised headline growth figure of 0.3% was "a little disappointing". | David Tinsley, an economist at UBS, said the unrevised headline growth figure of 0.3% was "a little disappointing". |
"Going forward we would expect some strengthening in performance, with the service sector regaining some traction," he added. | "Going forward we would expect some strengthening in performance, with the service sector regaining some traction," he added. |