Thursday, December 7News That Matters

Sluggish growth continues for economy

The UK economy grew by 0.3% in the three months to June – up from 0.2% in the previous quarter, official figures show.

Sky’s Economics Editor Ed Conway said: “It is inline with what was expected, but it is pretty weak.

“Normally you would be hoping for growth of about 0.7% to keep the UK growing in line with its long run potential.

“So 0.3% will be seen as something of a disappointment for many people – and coming after relatively weak growth in the first quarter as well.

“By my reckoning this is the weakest first half of the year that we have seen for the economy since 2012 – so in five years.”

The Office for National Statistics said the slight improved performance in the three months to June was underpinned by the dominant services sector – which represents more than three quarters of output.

Output increased by 0.5% during the period, up from 0.1% for the previous quarter.

But slides of 0.9% in construction and 0.5% in manufacturing held back the economy.

Chancellor Philip Hammond said: “Our economy has grown continuously for four and a half years, delivering record levels of employment.

“We can be proud of that; but we are not complacent. We need to focus on restoring productivity growth to deliver higher wages and living standards for people across the country.

“That is why we are committed to investing in infrastructure, technology and skills to deliver the best possible base for strong future growth.”

Britain’s economy performed better than expected in the wake of the Brexit vote last year but accelerating price rises – partly driven by the sharp fall in the pound since the vote – now appear to be taking their toll.

Wages fell by 0.2% in the first three months of 2017, the first time there has been a decline for two and a half years.

Conway added: “On the one hand we are not in a recession – that was one of the warnings and one of the risks we heard from some economists in the run up to the referendum, that there was likely to be a recession if the UK voted to leave.

“That clearly hasn’t happened and we are now a year on from that, and every quarter has been positive growth.

“But when you look at the numbers here… there is some cause for concern, and also some question marks as to whether this is indeed down to concerns that both households and business are facing over Brexit.”

“Households are feeling squeezed at the moment – inflation is relatively high at the moment and wages still low – and businesses are still unsure about what kind of arrangement we are going to have with the EU, or indeed the rest of the world, over the course of the next few years.”

Let’s block ads! (Why?)

Business News – Markets reports and financial news from Sky

Leave a Reply

Your email address will not be published. Required fields are marked *