UK annual GDP growth revised down for second quarter, July services weak

The quarterly growth rate was unrevised at 0.3%, the Office for National Statistics said

London: Britain’s economy recorded its weakest year-on-year growth since 2013 in the three months to the end of June, and the major services sector contracted in July, showing a possible loss of momentum as the Bank of England prepares to raise interest rates for the first time in a decade.

Official data showed year-on-year gross domestic product growth slowed to 1.5 per cent in the second quarter from 1.8 per cent in the first three months of the year.

This bucked economists’ expectations in a Reuters poll for it to be unchanged from an earlier 1.7 per cent estimate.

The quarterly growth rate was unrevised at 0.3 per cent, the Office for National Statistics said.

However, there was more positive news in the composition of growth in the second quarter, which showed bigger contributions from business investment and exports than previously thought.

“There was a notable slowdown in growth in the first half of 2017. The often buoyant services sector was the only area to grow in the second quarter,” ONS statistician Darren Morgan said.

But July figures for the services sector, which makes up 80 per cent of the economy, showed a 0.2 per cent decline on the month after growth of 0.3 per cent in June.

After faster than expected growth in 2016, Britain’s economy has underperformed its peers so far this year as the effect of a weaker currency since last year’s Brexit vote catches up with consumers.

Current account deficit

Friday’s data confirms that growth in the first half of 2017 was the slowest for the first half of any year since 2012.

Britain’s current account deficit, was 4.6 per cent in the second quarter, up from 4.4 per cent in the first quarter.

In cash terms, the deficit was £23.182 billion (Dh113.97 billion) compared with economists’ forecasts of £16 billion, after a big upward revision to the first-quarter deficit.

Consumer confidence figures from market research company GfK, released overnight, showed morale inched up in September, despite rising pessimism about household finances, but house price data for Nationwide showed the slowest growth in over 4 years.

The Bank of England has said it expects to raise interest rates in the coming months to tackle rising consumer price inflation, which it expects will exceed 3 per cent in October.

Most economists expect a rate rise will come after the BoE’s next Monetary Policy Committee meeting on November 2.

BoE Governor Mark Carney said in a radio interview earlier on Friday that policymakers had given about as clear a signal on rates as possible, and that the economy was on track for rates to rise in the relatively near future.

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