The UK’s GDP has slowed to 0.4 per cent quarter-on-quarter in the first three months of 2016, data from the Office for National Statistics has confirmed.
The updated figures were down from an upwardly revised 0.7 per cent quarter on quarter figure in the last quarter of 2015.
Services output grew by 0.6 per cent quarter-on-quarter but was down from 0.9 per cent in the last quarter of 2015 and was up 2.5 per cent year-on-year.
Services sector growth in the first quarter was led by distribution, hotels and catering increasing 1.4 per cent quarter-on-quarter as well as business services and finance, which was up 0.7 per cent.
On the other hand, industrial production fell by 0.2 per cent quarter-on-quarter, after a drop of 0.3 per cent in the fourth quarter of 2015.
IHS Global Insight chief European and UK economist Howard Archer says the second quarter of 2016 is likely to mark “the economy’s best growth performance for some time to come” saying tit could reach 0.5 per cent quarter-on-quarter.
As a result of the Brexit vote Archer says GDP growth prospect for the rest of this year and in 2017 look “pretty bleak”.
“We suspect that the economy may well stagnate in the third quarter and it could very well suffer limited contraction in the fourth quarter of this year,” he says.
Meanwhile, the UK’s current account deficit stood at £32.6bn in the first quarter of this year, down slightly from the upwardly revised £33.96bn recorded in the final quarter of 2015, figures from the ONS show.
The figure remains close to the record high of £34bn seen in the last quarter of 2015.
Archer calls the new data “another horrible current account performance” and “highly uncomfortable” for the UK economy, especially following the results of last week’s referendum.
He says: “There is a substantial danger that the UK will find it increasingly hard to attract the inward flows of capital needed to finance the current account deficit, particularly given its recent credit rating downgrades and the very real possibility of more to come. This could potentially trigger a sterling crisis and it will also make the Bank of England’s task more complicated on the interest rate front.”