UK Q1 GDP growth revised down to 0.2%

UK GDP growth has been revised down to 0.2 per cent compared to the 0.3 per cent reported in April.

The fall was “mainly due to broad-based downward revisions within the services sector”, ONS said in its second estimate.

In particular, consumer facing industries such as retail and accommodation fell and household spending slowed, partly driven by rising prices.

In Q4 last year GDP growth was 0.7 per cent.

Bond strategist at Investec Wealth & Investment Shilen Shah says today’s second estimate indicates the UK economy is going through a “soft path”.

“Despite Sterling’s fall in value, net trade was also a drag on the GDP print, suggesting that both imports and exports seem not to be terribly sensitive to the FX market.

“Given the dependency of the economy on consumer spending, weak real earnings growth suggests a near-term re-acceleration is unlikely.”

Economists had a mixed response to the disappointing GDP growth following April’s preliminary estimate with some saying post-Brexit sterling weakness was beginning to take its toll, while others dismissed it being the start of a sustained slowdown.