United Kingdom economic growth edged slightly higher in the three months to June, as a stronger service sector offset weaker manufacturing and construction. The Office for National Statistics (ONS) said the economy expanded by 0.3% in the quarter, up from 0.2% in the previous three months, but added there had been a notable slowdown from last year.
The UK economy is on course for an even deeper slowdown as consumer spending and business investment take a hit from uncertainty surrounding the Brexit negotiations, new research has found. Britain’s GDP is expected to drop from 1.8% growth last year to 1.5% in 2017 and to 1.4% in 2018, according to PwC’s UK Economic Outlook.
Economists have downgraded Britain’s growth prospects in the wake of political uncertainty following the general election and as a prolonged Brexit drag on business investment looms. New forecasts by the Centre for Economics and Business Research (Cebr) show that the UK economy will grow by just 1.3% in 2017, a substantial downward revision from an earlier forecast of 1.7%.
Britain's economy slowed more sharply than first thought in early 2017 as consumers felt the hit from the rise in inflation that followed the Brexit vote and exporters struggled to benefit from the weak pound. Thursday's downbeat official data - which contrasts with signs of acceleration in many other economies - comes two weeks before Britons vote in a national election.
How strong is the UK economy? The issue was debated between Theresa May and opposition leader Jeremy Corbyn during Prime Minister's Questions in the House of Commons shortly before the Wednesday vote confirming the June 8 election.
Britain is on the verge of an export and spending boom as economists rule out the likelihood of a slowdown this year. Strong global growth combined with the weak pound is expected to send overseas sales soaring, giving businesses the confidence to ramp up investment.
Activity in the UK's dominant services sector rose at a faster-than-expected pace in March. The Markit/CIPS purchasing managers' index (PMI) for services rose to 55, compared with economists' expectations of a slight increase to 53.5. The services sector, which accounts for three-quarters of the UK economy, said business activity and new work grew at the strongest rate so far this year.
The Bank of England (BOE) held interest rates at the record low level of 0.25% and maintained asset purchases at £435 billion on Thursday. The decision, which was made by an 8-1 majority, had been almost unanimously anticipated by central bank watchers with many expecting the BOE to choose caution until more clarity emerges on the Brexit process and the U.K. economy's capacity to manage outside of the European Union.
Strong consumer spending helped the UK's economy to grow faster than expected at the end of last year. The economy grew by 0.6% in the October-to-December period, the same rate as in the previous two quarters, according to an initial estimate from the Office for National Statistics.
The Bank of England has unveiled a series of stimulus measures in the wake of Brexit, including its first interest rate cut since the global financial crisis (2009), as it tries to jumpstart an economy shocked by Britain’s vote to leave the European Union.