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27/06/2003
UK economy growth dips sharply
According to the latest figures from the Office of National Statistics the UK economy grew by only 0.1% in the first quarter of this year, down from 0.5% in the preceding quarter.
The unexpectedly sharp dip was evident across many key business sectors and confounded analysts’ expectations of a 0.2% growth figure.
The poorer than expected performance was blamed on the aftermath of the Iraq war as, faced with uncertainty, both businesses and consumers had markedly reduced expenditure.
The weak performance of the UK economy has led to increased speculation that there may be a further cut in interest rates later this year if the low growth scenario persists.
Despite the overall fall, both the telecommunications and health sectors showed strong growth. But there was a marked decline in construction and a slowdown in the service sector.
Construction declined by 1.9% in the first quarter of 2003, compared to a rise of 1.9% in the fourth quarter of 2002. While the slowdown in the growth of the service sector - this increased by only 0.4% in the latest quarter compared to 0.8% in Q4 of 2002 - reflected lower growth across most sectors including finance and recreation.
However, manufacturing output increased by 0.1% mostly due to an increase in the production of transport equipment.
In the first quarter, household expenditure growth slowed to 0.2% from 1.0% in 2002 Q4. Though an increase in car sales over the quarter offset a decline in expenditure on entertainment that included spending on restaurants and hotels.
(SP)
The unexpectedly sharp dip was evident across many key business sectors and confounded analysts’ expectations of a 0.2% growth figure.
The poorer than expected performance was blamed on the aftermath of the Iraq war as, faced with uncertainty, both businesses and consumers had markedly reduced expenditure.
The weak performance of the UK economy has led to increased speculation that there may be a further cut in interest rates later this year if the low growth scenario persists.
Despite the overall fall, both the telecommunications and health sectors showed strong growth. But there was a marked decline in construction and a slowdown in the service sector.
Construction declined by 1.9% in the first quarter of 2003, compared to a rise of 1.9% in the fourth quarter of 2002. While the slowdown in the growth of the service sector - this increased by only 0.4% in the latest quarter compared to 0.8% in Q4 of 2002 - reflected lower growth across most sectors including finance and recreation.
However, manufacturing output increased by 0.1% mostly due to an increase in the production of transport equipment.
In the first quarter, household expenditure growth slowed to 0.2% from 1.0% in 2002 Q4. Though an increase in car sales over the quarter offset a decline in expenditure on entertainment that included spending on restaurants and hotels.
(SP)
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