U.K. Economy Barely Grows as Households Rein in Spending
(Bloomberg) -- U.K. consumer spending lost momentum in the first quarter and companies cut investment after severe weather swept the country.
Household spending rose just 0.2 percent, the weakest performance in more than three years, and business investment declined 0.2 percent as snowstorms kept shoppers at home and disrupted construction projects.
Economic growth was left unrevised at 0.1 percent, the figures Friday showed, and the Office for National Statistics continued to maintain that the weather had little impact on the quarter on balance. However, that assessment was challenged this week by Bank of England Governor Mark Carney.
The BOE refrained from raising interest rates this month, leaving economists and investors puzzling over whether officials will now choose to hike in August.
Much depends on how quickly the economy rebounds and the evidence so far is mixed, with Brexit fears mounting and consumers only just emerging from a cost of living squeeze that has hit stores from Marks & Spencer to home- improvement chain B&Q.
Consumer spending rose 1.1 percent from a year earlier, the smallest increase since the start of 2012.
The quarterly fall in business investment was the first in more than a year and was driven by lower spending on non- residential buildings and vehicles, the ONS said. Construction output dropped by 2.7 percent.
GDP per head fell 0.1 percent, leaving growth from a year earlier at 0.6 percent, the weakest pace since 2012.
Services, the largest part of the economy, rose just 0.1 percent in March following a 0.3 percent decline in February. Growth in the first quarter was unrevised at 0.3 percent, with consumer-facing services experiencing a poor start to the year.
Trade had no impact on GDP growth, as exports fell 0.5 percent from the fourth quarter and imports declined 0.6 percent.
Britain is set to remain stuck in the economic slow lane again this year, with growth of around 1.4 percent trailing well behind Group of Seven peers Germany, France and the U.S.
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