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Britain’s economy is in the grip of a “notable slowdown” with growth of just 0.3 per cent in the second quarter of the year, official figures revealed today.
Worryingly, output in the construction industry and manufacturing both fell. The economy had to rely on the giant services sector to keep its sluggish momentum. It expanded by 0.5 per cent between April and June, up from 0.1 per cent for the quarter before.
Overall growth was marginally up from the 0.2 per cent in the first three months of the year, but less than half the rate at the end of last year.
Economists predicted that the “anaemic” growth figure would mean the Bank of England’s monetary policy committee would not raise interest rates next month from the historic low of 0.25 per cent.
Chancellor Philip Hammond said: “Our economy has grown continuously for four and a half years, delivering record levels of employment. We need to focus on restoring productivity growth to deliver higher wages and living standards for people across the country.”
But shadow chancellor John McDonnell pointed to “weak growth under a weak government”. He added: “Working families are being squeezed with wages not keeping up with prices.”
Liberal Democrat leader Sir Vince Cable echoed the warning, saying: “We have weak economic growth presided over by a weak government, and this is likely to keep us near the bottom of the international growth league. We are continuing to see the effects of a weak pound which has hit wages and consumer confidence.”
Construction and manufacturing industry held back the economy, falling by 0.9 per cent and 0.5 per cent respectively for the period, with car production worse than expected.
Darren Morgan, head of GDP at the Office for National Statistics, said: “The economy has experienced a notable slowdown in the first half of this year. While services such as retail and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth.”
The brighter second-quarter performance for the services sector was driven by the retail and the film industry. Distribution, hotels and restaurants expanded by 1.1 per cent, with spending over Easter said to have been a boost.
Movies were the second biggest contributor from the services sector, growing by 8.2 per cent and bolstering GDP by 0.07 percentage points.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The preliminary estimate of GDP confirms that the economy has little momentum because consumers are enduring falling real wages and businesses are holding back from spending due to Brexit risk.”
Meanwhile, Environment Secretary Michael Gove rejected Britain lowering its animal welfare standards as part of negotiations for a US trade deal. Asked on BBC radio whether chlorinated chicken would be allowed in the UK, he said: “No. We are not going to dilute our high animal welfare standards.”
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