2022.05.1207:10:00UTC+00UK GDP Growth Slows In Q1

The UK economy expanded at a slower pace in the first quarter, data released by the Office for National Statistics showed on Thursday.

Gross domestic product advanced 0.8 percent sequentially, slower than the 1.3 percent increase in the fourth quarter and the economists' forecast of +1.0 percent.

On the expenditure-side, household spending gained 0.6 percent driven by spending on restaurants and hotels. On the other hand, government consumption dropped 1.7 percent due to large falls in health expenditure. The trade deficit for goods and services widened to a record 5.3 percent of nominal GDP in the first quarter, largely reflecting a sharp increase in goods imports.

Gross fixed capital formation moved up 5.4 percent in the first quarter. This reflected an increase in government investment, particularly in other buildings and structures.

In March, GDP slid 0.1 percent after no growth in February. The main contributor to the decline was the 0.2 percent decline in services output.

Production was also down in March, by 0.2 percent. Within production, manufacturing output decreased 0.2 percent. These falls were partially offset by construction, which grew 1.7 percent.

Nonetheless, monthly GDP was now 1.2 percent above its pre-coronavirus pandemic level.

The risk of recession has just risen, although strong price pressures will probably mean the BoE will raise interest rates further, Paul Dales, an economist at Capital Economics, said.

Another report from the ONS showed that the trade in goods deficit, excluding precious metals, widened by GBP 19.6 billion to GBP 62.2 billion in the first quarter, as imports of goods grew 15.2 percent, while exports dropped 0.3 percent.