New figures released by the Office for National Statistics (ONS) show that the UK’s economy grew at its slowest rate since 2012 in the first quarter of the year.
Sterling fell sharply as the possibility of an interest rate rise next month decreased. GDP growth was 0.1%, down from 0.4% in the previous quarter, driven by a dip in construction output and a slow manufacturing output (these are national figures – the Chamber’s recent economic survey results tell us that West & North Yorkshire is out-performing the national average). The poor weather of February and March, the so-called ‘Beast of the East’, had a “relatively small” impact, said the ONS. Many economists had forecast first-quarter growth of 0.3%.
A spokesman at the ONS said: “Our initial estimate shows the UK economy growing at its slowest pace in more than five years with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly.
“While the snow had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited with the bad weather actually boosting energy supply and online sales.”
Construction contributed to the drag on GDP, falling 3.3% in early 2018, while manufacturing growth slowed to 0.2%. Consumer-facing industries, including retail, fell sharply amid an on-going spending squeeze caused by higher inflation and slow wage growth.
“Sadly, the latest GDP figures confirm what we have been saying for some time: the UK is stuck in the global growth slow lane, while other countries race ahead. Westminster politicians need to start focusing their attention on a much stronger, more proactive drive to boost growth and investment.
“While the ‘Beast from the East’ clearly had an impact in the first quarter, the underlying slow-growth trend is real cause for concern. Instead of a constant focus on Brexit, business seeks vision and a clear direction from government on UK economic growth. Businesses across the country want the Prime Minister to make a ‘Mansion House Speech’ on the domestic business environment, and what her government will do to improve it.
“All the firms I speak to want to see far more focus on fixing the fundamentals here at home. No country with faltering infrastructure, a training system in chaos and patchy digital connectivity is going to win in the global growth sweepstakes. A back-to-basics approach that delivers concrete improvements would do more to boost productivity and competitiveness than flashy new initiatives, and matters as much as any eventual Brexit deal.”