UK economy slows further as inflation hits household spending

File photo of 50, 20, 10 and five pound notes as the ONS revises down its UK economy growth forecast

File photo of 50, 20, 10 and five pound notes as the ONS revises down its UK economy growth forecast. Photo: Chris Radburn/PA Wire - Credit: PA

The UK economy suffered an even deeper slowdown at the start of the year as the services sector came under pressure and inflation dealt a blow to household spending.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.2% in the first quarter of 2017, revising down the figure from its initial estimate of 0.3%.

Economists had been expecting GDP growth to slow from 0.7% in the fourth quarter of last year, but they had pencilled in growth of 0.3% for the first three months of 2017.

The ONS said: 'Consumer-facing industries such as retail and accommodation fell and household spending slowed.

'This was partly due to rising prices. Construction and manufacturing also showed little growth, while business services and finance continued to grow strongly.'


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The services sector put downward pressure on GDP after output was revised down to 0.2% from 0.3% for the first quarter.

It means the powerhouse industry, which accounts for 78% of the UK economy, slowed substantially from the 0.8% growth seen between October and December last year.

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Household spending was also dragging on overall growth for the first three months of the year after eking out its lowest quarter-on-quarter growth since 2014 at 0.3%.

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