The preliminary estimates of UK first quarter growth are likely to be upgraded in future as the services sector may have grown better than expected, the British Chambers of Commerce said Tuesday.
Gross domestic product expanded 0.3 percent sequentially during the January to March period, the slowest growth since the fourth quarter of 2012, preliminary estimates from the Office for National Statistics revealed on Tuesday. The growth rate halved from 0.6 percent in the final three months of 2014.
Output of the dominant service sector gained 0.5 percent. Nonetheless, it was slower than the prior quarter’s 0.9 percent growth. Meanwhile, construction and production declined 1.6 percent and 0.1 percent.
“Although we expected a slowdown in GDP growth, following weak construction and production figures, the scale of the decline estimated by the ONS understates the true momentum in the economy,” BCC Chief Economist David Kern said.
“It is likely that the services sector rose by more than 0.5 percent – in particular we are skeptical that business and financial services output was broadly flat in the quarter. It would not be surprising if this estimate was upgraded in due course.”
Year-on-year, GDP advanced 2.4 percent in the first quarter, slower than the expected increase of 2.6 percent. GDP was also 4 percent higher than the pre-recession peak of 2008.
“However, there is no room for complacency. The incoming government must work to foster the growth aspirations of businesses, helping the UK economy achieve sustained growth,” Kern said.
The country goes to polls on May 7 and the news of the growth slowdown came as a blow to the Conservative and Liberal Democrat coalition.
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