Economic growth slowed in first quarter of 2015

28 Apr 15

The UK economy slowed in the three months to March this year, according to preliminary growth estimates released nine days before the general election.

Gross domestic product grew by 0.3% for the first quarter of 2015, the Office for National Statistics said. This is down from 0.6% in the fourth quarter of 2014.

Output increased in just one of the four main industrial groups with. Services grew by 0.5% quarter-on-quarter, but it fell in construction (1.6%), production (0.1%) and agriculture (0.2%).

The UK’s forecast for growth is now expected to be 2.4% in 2015, down from 2.8% a year ago.

Chancellor George Osborne said: ‘It’s good news that the economy has continued to grow, but we have reached a critical moment. Today is a reminder that you can’t take the recovery for granted and the future of our economy is on the ballot paper at this election.’

But Labour’s shadow chancellor Ed Balls said: ‘While the Tories have spent months patting themselves on the back these figures show they have not fixed the economy for working families.’

Liberal Democrat Chief Secretary to the Treasury Danny Alexander said the figures showed that the economy was recovering well, but there was still work to do to secure the recovery.

‘Though volatile construction data shows a big dip, the underlying figures show that we are still making solid progress across the wider economy,’ he added. ‘Britain will continue to grow at a healthy rate if we stick to a sensible, balanced, timely plan to finish the job and do it fairly.’

Alicia Higson, senior economist at the Centre for Economic and Business Research, said in the year to come household expenditure will drive growth, supported by an uptick in real wages and sustained low interest rates.

‘Despite 2015 being a good year for households so far fragility lies on the horizon which would cause households to tighten their belt with the prospect of government cuts and inflation picking up in the latter half of 2015 and interest rate rises in the first half of 2016,’ she said.

‘With government spending expected to make a negative contribution to growth over the next few years and exports to the eurozone still flagging, higher capital investment is needed to increase incomes, support consumption, and diversify the sources of growth.’

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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