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UK Q1 growth revised down to 0.2%

By Michele Maatouk

Date: Thursday 25 May 2017

UK Q1 growth revised down to 0.2%

(ShareCast News) - The UK economy grew less than initially estimated in the first quarter as inflation took its toll on spending in the aftermath of the Brexit vote, according to data released by the Office for National Statistics on Thursday.
The second estimate from the ONS showed gross domestic product grew 0.2% in the first three months of the year, down from a previous estimate of 0.3% and from 0.7% growth in the final quarter of 2016.

GDP was also revised lower on an annual basis, to 2.0% from a previous estimate of 2.1%.

The changes from the initial estimates were due to downward revisions to growth in the services sector, which accounts for around 80% of economic output in the UK. The estimate of growth in services output was revised down to 0.2% from 0.3% reflecting a sharper slowdown in consumer-facing sectors than previously thought.

"UK GDP growth slowed to 0.2% in Quarter 1 2017 as consumer facing industries such as retail and accommodation fell and household spending slowed. This was partly due to rising prices. Construction and manufacturing also showed little growth, while business services & finance continued to grow strongly," the ONS said.

"Growth in UK GDP was broad-based but once again the services industries contributed by far the most to the headline growth rate, increasing by 0.2% in Quarter 1 2017 although this is more subdued than in recent periods."

Chris Williamson, chief business economist at IHS Markit, said: "The economy got off to an even worse start to the year than previously thought, according to fresh official data. There's a strong likelihood that growth will pick up in the second quarter, but whether robust growth can be sustained further ahead remains highly uncertain.

"It's hard to see any bright spots in the breakdown of the data with the sole exception of business services & finance, which grew 0.6%. The broader service sector, which has been the mainstay of growth in recent years, grew just 0.2%."

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