UK economic growth slowed sharply in the first quarter to a pace well adrift of its long-term average, as manufacturing and construction output dropped and services expansion eased, official figures have revealed.
The weak growth figures and the contraction in the embattled manufacturing sector represent a further blow for Chancellor George Osborne, whose vision of “a Britain carried aloft by the march of the makers” has failed to materialise.
The figures, from the Office for National Statistics, show UK manufacturing output fell by 0.4 per cent quarter-on-quarter in the opening three months of this year. And manufacturing output in the first quarter was down 1.3 per cent on the same period of 2015.
Overall UK gross domestic product (GDP) growth slowed to just 0.4 per cent quarter-on-quarter in the opening three months of 2016. This equates to an annualised pace of just 1.6 per cent, well adrift of a long-term average put at around 2.75 per cent by Bank of England Governor Mark Carney.
In the fourth quarter of last year, UK GDP rose by 0.6 per cent.
Mr Osborne blamed the poor first-quarter growth partly on uncertainty ahead of the referendum on UK membership of the European Union, a poll promised by Prime Minister David Cameron ahead of the 2015 General Election and scheduled for June 23.
Seeming to take a relatively sanguine view of the UK’s below-trend growth, he said: “It’s good news that Britain continues to grow.”
However, he cited signs that the “threat” of the UK leaving the EU was weighing on the economy.
He added: “Investments and building are being delayed.”
Growth in the UK services sector slowed to 0.6 per cent in the first quarter, from 0.8 per cent in the closing three months of last year.
UK construction output dropped by 0.9 per cent in the first quarter.
Howard Archer, chief UK economist at consultancy IHS Global Insight, said: “We expect GDP growth to be limited to 0.3 per cent quarter-on-quarter in the second quarter, amid heightened uncertainty in the run-up to the June 23 referendum on EU membership.
“In particular, this is expected to weigh down on business investment and employment, and it may well also limit consumers’ willingness to splash out on big-ticket items. Muted global growth will also hamper UK economic activity in the near term at least.”
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