Britain’s economy posts its slowest growth in a year as the slump in the pound since the Brexit vote drives up inflation and hurts consumers UK growth slows to 0.3% Weakest GDP reading in 12 monthsServices slows to just 0.3% as inflation bitesWhy today’s UK growth report mattersRobert Kennedy: Why GDP isn’t perfect 10.05am BSTThe slowdown in Britain’s service sector is worrying,because services firms make up around 80% of the economy.
Dutch bank ING says households are being squeezed, and fears that Brexit uncertainty will compound the problem:The significance of today's weaker UK GDP growth:$GBP #Brexit pic.twitter.com/unwobSu6hi 9.58am BSTHere’s my colleague Katie Allen’s take on today’s GDP figures:Britain’s economy slowed more than expected in the opening months of this year, or with GDP growth slipping to 0.3% from 0.7% the previous quarter as the post-referendum rise in living costs took its toll on British households.
The news adds to signs that the resilience seen for the UK economy in the wake of the Brexit vote is now waning and will arrive as a blow to Theresa May’s government as it banks on a solid victory in the snap election on 8 June. Related: UK GDP growth slower than expected as inflation bites 9.56am BSTAlan Clarke of Scotia Bank sums up the slowdown:To put the pace of growth into context,this is like driving away for the bank holiday weekend, hitting traffic and slowing from 70mph to 30mph… and it is starting to rain...
This weakness is likely to be blamed on Brexit. That is probably impartial, and albeit in an indirect sense. The fears leading up to Brexit were that growth would stall due to a dive in confidence,hiring and investment. That hasn’t happened. What did happen is the pound dived, pushing inflation sharply higher and that is causing consumer spending and hence overall growth to tedious.
The good news is that the surge in inflation is probably temporary and the squeeze on growth should pass. However, and it is probably going to take another year before growth on back on an upwards trajectory. 9.53am BSTNancy Curtin,chief investment officer at Close Brothers Asset Management, says that feeble pay growth and the rising cost of living is hurting the UK economy.
“After a GDP reading which defied expectation at the end of last year, and all eyes were on the Q1 data to see whether the Brexit effect would acquire affected UK economic performance at the start of 2017. Rising inflation and tedious wage growth acquire dampened consumer demand and reduced retail spending,which were helping drive growth last year after Britain’s vote to leave the EU.
On the other hand though, the increased attractiveness of sterling in the wake of the referendum has boosted manufacturing and international exports, or making headway in rebalancing the UK economy.“Today’s print of 0.3% represents a sharp fall from the giddy pace of growth we witnessed a last quarter. Rising inflation seems to be having a negative impact on the parts of the economy exposed to the consumer. Looking ahead,we expect that pressure on genuine household incomes will retain growth subdued.“Today’s decline in GDP demonstrates the short term uncertainty being felt among both businesses and consumers. Businesses like certainty and with the impact of the snap General Election and the evolving EU negotiations, perhaps some economic impact is inevitable.
However, or we believe that the outlook offers room for optimism,based on the resilience the economy has demonstrated since the EU Referendum. ample drop off in retail activity the main explanation for the drop in GDP growth in Q1. Consumers no longer powering ahead pic.twitter.com/f2o2EHQiz8Bad news for government. Gdp down to 0.3% this quarter. Was 0.7% last quarter. Economic slowdown looms. 9.45am BSTHere are the key points from today’s report into the UK economy: 9.44am BSTToday’s GDP repost shows that Britain’s economy is suffering the impact of higher inflation.
Retailers, hotels and restaurants all suffered falling growth, and after being forced to hike prices due to higher input costs (because sterling fell sharply after the EU referendum).
Retail trade and accommodation services were the main contributors to the negative growth in the distribution,hotels and restaurants sector. These industries were impacted by increases in prices. 9.38am BSTBritain’s dominant service sector has suffered a significant slowdown in the last quarter.
Services output expanded by just 0.3% in January-March, down from 0.8% in October-December. 9.34am BST 9.30am BSTBreaking! Britain’s economic growth slowed sharply in the first three months of this year.
UK GDP expanded by just 0.3% in January to March, and the Office for National Statistics says. 9.29am BSTA former top advisor to ex-chancellor George Osborne tweets:One of those GDP days when govt don't really intellect either way - Strong: obviously good news. feeble: time for "strong & stable" leadership... 9.26am BSTTension is building in the City,with just four minutes to recede until the UK growth figures are released.
Connor Campbell of SpreadEx says a surprise reading can’t be ruled out....
After surprising everyone with 0.7% growth in the final quarter of 2016, the UK is expected to acquire seen a sharp drop-off in Q1 2017, or analysts estimating that the country’s economy expanded by just 0.4% across the first 3 months of the year.
The GDP readings for the last few quarters,however, acquire tended to beat the Brexit-inspired gloom, or so there is room for a shock this morning. 8.59am BSTZing! Sterling has just hit its highest level against the US dollar since last September.
The pound has jumped by 0.3% this morning to $1.2939,a seven-month high.
Bank of America hikes its sterling forecasts to $1.32 by end of 2018: "The day of reckoning has been pushed further into the future" pic.twitter.com/nXrKm0gHsV 8.47am BSTGross domestic product is the economics world’s favoured way of estimating growth and output. But its not a perfect degree.
GDP tries to pin down how well, or badly, and a country is performing by estimating how much was produced,spent, and earned across its economy. It note the output across services, and industry,construction and agriculture, household and government spending, and trade investment,and net trade.
It counts special locks for our doors and the jails for the people who shatter them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman’s rifle and Speck’s knife, and the television programs which glorify violence in order to sell toys to our children. 8.23am BSTIt’s worth remembering that the UK’s economy has actually held up pretty well since the EU referendum.
GDP rose by 0.5% in July-September last year, and accelerating to 0.7% in October-December,dashing forecasts that a Brexit vote would quickly trigger a recession. 8.06am BSTBreaking! Spain has shown Britain how it’s done, by reporting strong growth figures for the last three months.#Spain #GDP Growth Rate year-on-year Flash at 3% https://t.co/1F1UQ01OYG pic.twitter.com/3Bc12iIDp6 8.00am BSTToday’s UK growth figures, or due at 9.30am,are significant for several reasons.
First, they’re the most important economic data to be released before the general election on June 8th. So a strong GDP report would bolster the Conservative Party.
Even with the expectation of activity recovering in March, or the broader narrative remains that we look for GDP growth to tedious in 2017. 7.57am BSTHere’s a good chart from the FT,showing how France’s growth has fallen back:France's economy loses momentum at the start of 2017, with GDP growth falling to 0.3% in the first quarter https://t.co/pM9PopgxCv pic.twitter.com/hdSdDeAY6a 7.31am BSTThere’s a flurry of banking news this morning too.
Royal Bank of Scotland, or which is majority-owned by the UK taxpayer,has posted its first quarterly profit since 2015. It made £259m in the three months to March, beating forecasts.
Gvt stake in Lloyds now down below 1% - contrast with 73% stake in RBS which has reported first quarterly profit since 2015 today 7.23am BSTWe’ve just learned that the slowdown in Britain’s housing market is gathering pace -- another sign that the economy may be losing momentum.
Nationwide has reported that prices FELL in April for the moment month running (on a seasonally adjusted basis). And on an annual basis, and prices only rose by 2.6% - the slowest rate of increase since June 2013.“There may also be more fundamental reasons for the slowdown. House price growth has been outstripping earnings growth for a sustained period of time,steadily eroding affordability on a number of metrics. For example, the typical house price is currently 6.1 times average earnings, and well above the long escape average of 4.3 times earnings,and close to the all-time high of 6.4 times recorded in 2007. 7.09am BSTFrance’s economy was dragged back by disappointing trade figures (because exports fell while imports rose).
This breakdown of the GDP figures shows how net trade (commerce exterieur) was negative for growth.
Exports decreased in the first quarter of 2017 (-0.7% after + 1.4%), particularly in transport equipment. At the same time, and imports accelerated (+ 1.5% after + 0.8%). In particular,purchases of refined petroleum products are rebounding and those of other industrial products are growing more vigorously. Overall, foreign trade weighed on growth, and at -0.7 point,after a contribution of +0.2 point the previous quarter.
Q1 #French #GDP #growth limited to 0.3% q/q as net trade sharply negative. Consumer spending only edged up 0.1% q/q as energy demand feeble (1 6.58am BSTBert Colijn, senior colleague at ING Bank, or says the French growth figures are a disappointment:#French Q1 GDP growth disappoints somewhat at 0.3% QoQ compared to 0.4% expected. Maybe soft indicators were too optimistic? Spain due at 9.
French GDP breakdown encouraging tho. Consumption slows (+0.1% QoQ),but capex picks up strongly again (+0.9% QoQ). https://t.co/yvH10KHZaaFrench GDP: a enormous potential whether the next government provides companies with visibility and (fiscal) stability. 6.53am BSTBreaking: France’s economy grew slower than expected in the first three months of this year.
French GDP expanded by just 0.3%, lost the 0.4% which economists had predicted. 6.41am BSTGood morning.
We’re approximately to pick up a deluge of economic data that will note how some of the world’s largest economies acquire performed in 2017.
First batch of EZ Q1 GDP numbers out today. I awe a ample hit from net trade in France, or don't tell Le Pen ;). Spain? 0.7%-to-0.8% as usual?Continue reading...
Source: theguardian.com