The rate of economic growth halved in the three months to the end of March, official figures show, marking the slowest quarterly growth for two years. The economy grew by 0.3% in the first quarter the Office for National Statistics said.
That compares with 0.6% in the last three months of 2014 and 0.7% three months earlier. The figures, which come nine days before the general election, suggest a "temporary" slowdown, analysts said. The ONS said the economy was 2.4% larger than the same period a year earlier, meaning it remains the fastest growing economy in the G7. Growth of 0.5% in the services industry was offset by a 1.6% fall in the pace of economic output in construction.
The UK services sector accounts for around three quarters of economic growth, with construction, manufacturing and production accounting for the remaining quarter. The 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 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." Vicky Redwood chief UK economist at Capital Economics said the figures clearly wouldn't help the coalition parties with just nine days to go until the general election.
But she added the slowdown in the economy "should just be temporary" and that quarterly economic growth should return to between 0.7% and 0.8% later in the year. For reasons no one can quite explain, construction in Britain has been lousy for six months. The production industries have been especially hurt by the oil price collapse, which has led to something of a crisis in the North Sea. Excluding oil and gas, quarter-on-quarter growth would have been 0.1 of a percentage point higher at 0.4%. But nor has manufacturing been sparkling: it showed growth of just 0.1%.
And perhaps because of the strengthening pound, the growth rate of our manufacturers has progressively decelerated in a straight line from 1.4% a year ago More unexpectedly, some service industries in which the UK is a world leader - finance, engineering and architecture - have had a poor few months. One possible explanation of their slowing growth is that demand for our services and goods in important export markets - especially China and the US - may be a bit worse than official figures show.
That could be a sign of trouble ahead. So thank goodness for our domestic-facing services. Or to put it another way, if we weren't a nation of shoppers and restaurant eaters, there would be very little growth at all. The output of distribution, hotels and restaurants increased by 1.2% in the quarter - only slightly slower than at the end of last year.
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