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The British economy grew at its slowest pace for more than five years in the first quarter, as it was hit by a significant drop in construction work and sluggish manufacturing activity.

The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.1% in its initial estimate for January to March.

It was the weakest quarterly growth since the fourth quarter of 2012 and worse than experts had predicted.

Economists had expected a slowdown to 0.3%.

While many thought the so-called Beast from the East would have hit Britain’s economy hardest, official figures showed that recent snowfalls had a relatively small effect on growth.

ONS spokesman Rob Kent-Smith, however, said the “overall effect was limited, with the bad weather actually boosting energy supplies and online sales.”

Nonetheless, the Chancellor of the Exchequer highlighted the “exceptional” weather as a reason for the poor performance.

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Philip Hammond says the weather was to blame – but the ONS disagrees. Credit: PA

In a statement, Philip Hammond said: “Today’s data reflects some impact from the exceptional weather that we experienced last month, but our economy is strong and we have made significant progress.

“Our economy has grown every year since 2010 and is set to keep growing, unemployment is at a 40 year low, and wages are increasing as we build a stronger, fairer economy that works for everyone. We are committed to locking in a bright future and better quality of life for everyone which is why we are investing in our people, building new infrastructure, and supporting our vital public services.”

Chief Secretary to the Treasury Liz Truss denied that Brexit was a factor in the slowdown.

She said although the vote had caused “uncertainty” for business, evidence showed it was now reducing.

Challenged by ITV News Political Correspondent Libby Wiener over the Government’s poor record, she insisted the UK was still recovering from the 2008 crash.

“I think there have been people holding back from investment who are now investing,” she said.

“We will see the result of that investment coming through.”

The pound tanked against the dollar following the news of the growth figures, falling 0.7% to 1.38 US dollars.

Against the euro, sterling was down 0.3% at 1.14 euros.

Construction was the biggest drag on GDP, having experienced its most dramatic fall since the second quarter of 2012 – dropping 3.3% over the first three months of the year.

Visa consumer spending report
Visa consumer spending report

Manufacturing growth slowed to 0.2%, though that was partially offset by a rise in energy production due to colder weather.

The UK’s powerhouse services sector – which accounts for around 79% of the economy – was the biggest supporter of GDP growth in the first quarter, having increased by 0.3%.

However, the longer term trends point to weakening of service sector growth.

It comes amid a squeeze on consumer finances from higher inflation, triggered by the Brexit-induced collapse in the pound, and slow wage growth.

The UK economy is still struggling to bounce back to levels seen in the final quarter of 2016 when GDP rose by 0.6%.

The economic slowdown is likely to play a part in determining the course for interest rates this year.

Rate-setters will also have to consider recent easing in inflation rates, with the Consumer Price Index (CPI) of inflation having dropped back from 2.7% to 2.5% in March – marking a one-year low.

Bank of England Governor Mark Carney has already warned markets that a rate rise in May is not a certainty.

Source: iTV

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