The U.K. economy registered its worst performance since the end of 2012 in the first quarter as snow hit retail sales and disrupted building work, though statisticians said the overall effect of the weather was limited.
The Office for National Statistics said growth slowed to 0.1 percent from 0.4 percent in the final three months of 2017, worse than the 0.3 percent economists. GDP grew 1.2 percent from a year earlier, also the least since 2012.
The figures will add to speculation that the Bank of England will refrain from raising interest rates next month, a move that had been considered a done deal until recently.
The Beast from the East snowstorm brought travel chaos to much of the country from the end of February. Early returns show construction falling 2.3 percent in March, while services and industrial production grew just 0.1 percent, with the latter being boosted by increased domestic energy consumption during the freeze.
In the first quarter, services growth slowed to 0.3 percent, construction output fell 3.3 percent and industrial output rose 0.7 percent. Manufacturing climbed 0.2 percent.
The BOE had predicted the quarterly slowdown to 0.3 percent last quarter, a rate that leaves the economy running below its estimated 1.5 percent “speed limit.” Annualized growth was 0.4 percent, the weakest since 2012, compared with a forecast 2 percent in the U.S.
The ONS said it was hard to estimate precisely how much the weather cost the economy.
The latest figures are based on less than half the data that will eventually be available, and weather-affected quarters are notoriously volatile. In the fourth quarter of 2010, an initially estimated contraction of 0.5 percent was subsequently revised to show growth of 0.1 percent.
But the initial report did nothing to turn the BOE more dovish, with three Monetary Policy Committee members actually calling for higher rates in February 2011.
Last month, the MPC split once again, as policy makers Michael Saunders and Ian McCafferty began a fresh push to raise rates, warning of inflationary pressures building in the labor market.
Source : Bloomberg