UK economy slows down in first quarter

The first estimate of first quarter UK GDP missed economists’ expectations by far and showed that the economy only grew by 0.3 per cent in the first three months of 2015. This was the weakest pace of growth in more than two years and compared to forecasts of 0.5 per cent growth.

Sterling initially fell against the dollar before rebounding to rise back above $1.53, thanks to a broadly weaker USD.

Below are comments from various economists in reaction to the data released on Tuesday:

Capital Economics

We doubt that the recovery is on the cusp of a sustained slowdown. Households’ real incomes are still on track for their strongest growth this year since 2006.

IHS Insight

Growth in the first quarter was held back by marked contraction in construction output and a small dip in industrial production.

In addition, growth slowed appreciably in the dominant services sector, particularly in the business services and finance sector.

Despite the marked slowdown in the first quarter, we remain largely upbeat about growth prospects for 2015. Nevertheless, the marked first quarter slowdown will necessitate our cutting our 2015 GDP growth forecast to 2.4% from 2.6%.

John Cridland, the CBI director general

Growth slowed but checking the temperature with our members and surveys hints that the economy is more resilient than these figures might suggest…

But a strengthening pound means manufacturers are fighting a loss of competitiveness in the euro area, threatening to knock our exports performance.

The FTSE 100 blue-chip equity index extended its losses from earlier in the session just before the GDP data, declining 1 per cent to 7,031 points, though these losses were trimmed in the minutes following the release.
The UK’s economy grew by just in the first quarter, according to the Office for National Statistics, compared to expectations..

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