Britain’s economy grew by just 0.3% in the second quarter of 2017 after what government statisticians called a “notable slowdown” in the first half of the year.
The expansion in the three months to June followed 0.2% growth in the first quarter and was in line with City expectations for the eagerly awaited first estimate of the economy’s recent performance.
Official data for gross domestic product showed that of the three big sectors of the economy, only services were bigger at the end of June than in March, posting growth of 0.5% over the quarter.
Industrial production, which includes manufacturing, fell by 0.4%, while construction was down by 0.9%.
Darren Morgan, head of national accounts at the Office for National Statistics, said: “The economy has experienced a notable slowdown in the first half of this year. While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth.”
The economy confounded predictions that it would plunge into recession after the EU referendum last June, posting stronger growth in the second half of 2016 than in the first half.
But the fall in the value of the pound has pushed up inflation and made life tougher for consumers since the turn of the year.
Retail activity was the biggest single contributor to growth in the second quarter but this followed a fall in the first quarter. The ONS said spending in the shops and online was broadly flat in the first half of the year.
The ONS said the film industry played a significant role in the modest rise in GDP from the first quarter, adding almost 0.1 percentage points to growth.
A spokesman said the boost to film production was the biggest factor, but added that ticket sales for Wonder Woman and the latest in the Pirates of the Caribbean franchise also played a part.
Despite buoyant survey evidence, the hard economic data from the ONS showed manufacturing was struggling. UK factories saw production fall by 0.5% during the second quarter, largely due to a drop in motor vehicle output.
In the year to the second quarter, the economy grew by 1.7%, down from 1.9% in the first quarter.
When adjusted for the UK’s higher population, GDP per head increased by 0.1% in the second quarter after being flat in the first quarter. The past year has seen GDP per head rise by 1%.
Philip Hammond, the chancellor of the exchequer, 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.”
John McDonnell, the shadow chancellor, said: “Today’s GDP figures reveal weak growth under a weak government, and expose the last seven years of Tory economic failure.
“Growth for the first half of 2017 is below expectations, and it follows continued data showing working families are being squeezed with wages not keeping up with prices. The truth is that the Tories’ austerity cuts have undermined working people’s living standards and weakened the UK economy.”
Chris Williamson, the chief business economist at IHS Markit, said: “These meagre growth rates indicate that the economy has lost momentum in 2017, and will consequently fail to achieve the 1.8% expansion seen in 2016.
“The second quarter growth was below the 0.4% expansion anticipated by the Bank of England, and therefore suggests we’ll see the central bank revise down its forecasts for the economy next week from the 1.9% growth it has currently penciled in.
“The confirmation of the lacklustre performance of the economy so far this year surely also diminishes the chance of an interest rate hike any time soon, especially as growth prospects for coming months have become increasingly skewed to the downside.”