25 August, 2017
The slight increase in economic growth (GDP) from 0.3 per cent from 0.2 per cent in the first three months of the year means the United Kingdom is likely to have recorded the slowest second quarter growth out of all the G7 group of nations, with Canada expected to deliver another strong increase in GDP for the period.
It came as Moodys Investors Service warned that while the United Kingdom economy is expected to see moderate and stable growth in the third quarter, it faces challenges from weaker consumption and a stagnating housing market.
However, there was a notable slowdown in growth in terms of household spending, which increased by just 0.1% in the three months to June.
Business investment in the quarter was flat compares with a 0.6% rise in the first three months of the year.
"GDP growth has slowed markedly in the first half of the year with relatively robust services growth, partly thanks to a booming film industry, offset by weak performances from manufacturing and construction in the second quarter.Household spending grew weakly, with the lower-value pound hitting household budgets, while business investment showed no growth at all".
"In fact, with exporters opting to increase profit margins at the expense of export volumes, net trade has depressed GDP by around 0.5 percentage points since last June's decision to leave the European Union", said economist Joanna Davies at Fathom Consulting. Yearly growth was forecast at 1.7%.
However, Hawksworth said he doesn't think this slowdown will turn into a recession, given that "employment growth remains reasonably strong and government spending is now cushioning some of the blow to business confidence from Brexit".
Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, added: "The GDP figures show that the United Kingdom economy has been the slowest growing G7 economy this year because Brexit risk has dampened business investment and sterling's depreciation has hurt consumers more than it has helped exporters".
Separate figures on Thursday from the CBI showing falling retail sales also painted a gloomy picture of the consumer economy.
Economic growth in Northern Ireland is slowing along with the United Kingdom as a whole amid a squeeze on household incomes and the fallout from the vote for Brexit, it has been claimed.
The Pound Indian Rupee (GBP INR) exchange rate recovered from a seven-week low this morning as the United Kingdom posted its latest GDP estimate.
