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UK growth hit by trade deficit and services slowdown UK growth hit by trade deficit and services slowdown
(about 1 hour 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 figures 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%. 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 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 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". However, David Kern, chief economist at British Chambers of Commerce, said the GDP figure "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 had been revised up, while the trade deficit had 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.