Britain grows 0.2 percent in first quarter: official

23rd April 2010, Comments 0 comments

Britain's economy grew by a weaker than expected 0.2 percent in the first quarter, slowing from the previous three months, official data showed Friday as a May 6 general election neared.

"Gross domestic product (GDP) increased 0.2 percent in the first quarter of 2010, compared with an increase of 0.4 percent in the previous quarter," the Office for National Statistics said in a statement giving its first estimate.

"The decrease in the growth rate was due to weaker growth in services," it added.

The official reading undershot market expectations for similar growth of 0.4 percent and came after particularly harsh winter weather in January hampered economic activity.

The performance of the economy, which escaped from a record recession in the final three months of 2009, is the key issue in the run-up to the general election in 13 days' time.

"On the face of it, the (latest growth) numbers are a blow to the government," said economist Jonathan Loynes at the Capital Economics consultancy.

British GDP meanwhile shrank by 0.3 percent in the first quarter, compared with the equivalent January-March period in 2009.

The government "will no doubt argue that the weakness of the recovery undermines the (opposition) Conservatives' plans to implement an earlier and bigger fiscal tightening," Loynes said.

"Either way, the figures underline again the fragility of the economic outlook. With a big fiscal squeeze coming under any form of government, monetary policy needs to remain extremely supportive," he added.

The data was somewhat skewed by wintry weather during January which hampered activity.

"Overall growth in the first quarter was clearly dragged down appreciably by the very bad weather in January, and most indicators suggest that there has been a marked pick up in activity since then," said IHS Global Insight economist Howard Archer.

Whichever party wins power in the general election, experts argue that significant tax rises and spending cuts are required to fix Britain's mountain of public debt.

© 2010 AFP

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