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| UK economy suffers weakest period of GDP growth in five years | UK economy suffers weakest period of GDP growth in five years |
| (7 months later) | |
| Britain’s economy slowed to a virtual standstill in the first three months of 2018, the weakest period of activity in more than five years. | Britain’s economy slowed to a virtual standstill in the first three months of 2018, the weakest period of activity in more than five years. |
| Office for National Statistics figures showed a sharp contraction in the construction sector, weaker manufacturing growth and a squeeze on consumer spending power contributed to GDP growth of 0.1% in the first quarter. | Office for National Statistics figures showed a sharp contraction in the construction sector, weaker manufacturing growth and a squeeze on consumer spending power contributed to GDP growth of 0.1% in the first quarter. |
| Is Philip Hammond right to be so Tiggerish over the economy? | |
| The chancellor, Philip Hammond, said the economy was strong and that the exceptional weather in late February and early March had been partly to blame for the slowdown. The ONS, however, said the “beast from the east” had been only a minor factor. | The chancellor, Philip Hammond, said the economy was strong and that the exceptional weather in late February and early March had been partly to blame for the slowdown. The ONS, however, said the “beast from the east” had been only a minor factor. |
| John McDonnell, the shadow chancellor, said: “The truth is that the last eight years of Tory economic failure has allowed our economy to be left exposed. | John McDonnell, the shadow chancellor, said: “The truth is that the last eight years of Tory economic failure has allowed our economy to be left exposed. |
| “It’s clear to everyone except Philip Hammond that our economy is in need of increased investment and working families are struggling with the cost of living and the burden of increasing household debt.” | “It’s clear to everyone except Philip Hammond that our economy is in need of increased investment and working families are struggling with the cost of living and the burden of increasing household debt.” |
| Frances O’Grady, the TUC general secretary, said: “One week of snow doesn’t explain a decade of weak growth, dismal productivity and falling wages. It’s the avalanche of cuts that has done the long-term damage.” | Frances O’Grady, the TUC general secretary, said: “One week of snow doesn’t explain a decade of weak growth, dismal productivity and falling wages. It’s the avalanche of cuts that has done the long-term damage.” |
| The performance of the economy was much worse than the Bank of England had been expecting and almost certainly puts paid to any chance of an interest rate rise when the monetary policy committee meets early next month. | The performance of the economy was much worse than the Bank of England had been expecting and almost certainly puts paid to any chance of an interest rate rise when the monetary policy committee meets early next month. |
| The Bank, along with most City economists, had been expecting growth of 0.3% and the surprise news from the ONS led to a drop in the pound in the currency markets. | The Bank, along with most City economists, had been expecting growth of 0.3% and the surprise news from the ONS led to a drop in the pound in the currency markets. |
| GDP per head, which adjusts for a rising population, fell in the three months to March and was only 0.6% higher than a year earlier. Some analysts said growth was likely to pick up over the coming months because earnings were growing faster than prices, reversing the trend of the past year. | GDP per head, which adjusts for a rising population, fell in the three months to March and was only 0.6% higher than a year earlier. Some analysts said growth was likely to pick up over the coming months because earnings were growing faster than prices, reversing the trend of the past year. |
| Over the year to the first quarter, the economy grew by 1.2%, well below its five-year average of 2.2% and the slowest annual rate since the spring of 2012. | Over the year to the first quarter, the economy grew by 1.2%, well below its five-year average of 2.2% and the slowest annual rate since the spring of 2012. |
| The ONS’s flash estimate showed construction output was down 3.3% in the first three months of the year, while manufacturing growth slowed to 0.2%. | The ONS’s flash estimate showed construction output was down 3.3% in the first three months of the year, while manufacturing growth slowed to 0.2%. |
| Production, which includes electricity and gas supply in addition to manufacturing, rose by 0.7% as a result of households using more energy during the cold weather. Services, which account for almost four-fifths of the economy, grew by 0.3%. | Production, which includes electricity and gas supply in addition to manufacturing, rose by 0.7% as a result of households using more energy during the cold weather. Services, which account for almost four-fifths of the economy, grew by 0.3%. |
| Rob Kent-Smith of the ONS said: “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.” | Rob Kent-Smith of the ONS said: “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.” |
| Jeremy Cook, the chief economist at WorldFirst, said: “It’s not just UK voters who could call themselves the Jams (Just About Managing), it now seems that the wider UK economy is in that predicament too. | Jeremy Cook, the chief economist at WorldFirst, said: “It’s not just UK voters who could call themselves the Jams (Just About Managing), it now seems that the wider UK economy is in that predicament too. |
| “At the beginning of last week, the expected probability of a base rate hike at May’s Bank of England meeting was around 86%; it now sits at 34% and sterling is sliding as investors price in a delay to increases in the base rate until December.” | “At the beginning of last week, the expected probability of a base rate hike at May’s Bank of England meeting was around 86%; it now sits at 34% and sterling is sliding as investors price in a delay to increases in the base rate until December.” |
| In another sign of the pressures on household budgets, figures from the Insolvency Service showed the number of people unable to pay their debts in England and Wales reached its highest level in more than five years in the first three months of 2018. There were 27,388 personal insolvencies in the first quarter of 2018 – the highest quarterly figure since the third quarter of 2012. | In another sign of the pressures on household budgets, figures from the Insolvency Service showed the number of people unable to pay their debts in England and Wales reached its highest level in more than five years in the first three months of 2018. There were 27,388 personal insolvencies in the first quarter of 2018 – the highest quarterly figure since the third quarter of 2012. |
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