UK economic growth slumps to lowest since 2012

UK GDP figures for the first quarter of 2018 released today by the Office for National Statistics show that UK GDP grew by 0.1 per cent over the period, the slowest growth observed since the fourth quarter of 2012.

Sterling fell sharply as the chances of an interest rate rise in May recceded.

Following the news the pound was down almost one and a half cents against the dollar at $1.3775.

As with the figures for Scotland’s Q4 GDP which were released earlier this month, the data continues to show construction exacting a downward pull on overall growth.

Services were the largest contributor, but as highlighted by the ONS, the trend suggests that growth in services is weakening, especially in consumer facing industries.

Rob Kent-Smith, head of national accounts 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.”

The figures are a first estimate and are likely to be revised by the ONS as more data becomes available. Many economists had forecast first-quarter growth of 0.3 per cent.

Commenting on the growth figures, Liz Cameron, chief executive and director at Scottish Chambers of Commerce, said: “It is disappointing to see such low levels of growth in the UK economy overall. As highlighted by the ONS, the ‘Beast from the East’ likely impacted on certain sectors of the economy, particularly petrol sales within the retail industry. Areas like construction continued to experience falls in output across all months of the quarter, providing further evidence that the drivers of this slow growth are broader.

“Our recent Quarterly Economic Indicator showed that many sectors of the economy were looking to invest to meet expectations for the future. In order to do this however, it is critical that respective governments act to provide both policy certainty, and the infrastructure upgrades desperately needed to keep the UK competitive.

“The UK, and Scotland within it, need to return to historical levels of growth to achieve the shared prosperity that all elements of civic society want to see. Business will lead on this, but we need government to push forward on the infrastructure upgrades necessary to see step changes in productivity and foster economic resilience.”