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ONS revises GDP growth figure to 0.2% for first quarter as post-Brexit vote rise in prices puts pressure on household budgets
The UK economy slowed even more sharply than first thought in the opening months of this year as rising prices in the wake of the Brexit vote took their toll on consumer spending.
The Office for National Statistics said GDP grew just 0.2% in the first quarter of 2017, a marked change of pace from the 0.7% growth in the final three months of 2016. Statisticians had previously estimated the economy grew 0.3% in the first quarter.
There was no growth at all in the first quarter in GDP per head, which adjusts for the size of the population and is generally seen as a better guide to prosperity than mere GDP.
The figures provide the latest evidence that the early resilience to the EU referendum result last June is now wearing off as higher inflation puts consumers under pressure. Prices have been picking up pace since the Brexit vote because it sent the pound sharply lower and has raised the cost of imports to the UK. That higher inflation has hit household budgets and dented the key driver of UK growth, consumer spending.
The ONS highlighted that pattern in its updated estimate of GDP growth on Thursday.
“UK GDP growth slowed to 0.2% in quarter one of 2017 as consumer-facing industries such as retail and accommodation fell and household spending slowed. This was partly due to rising prices,” it said in the data release.
“Construction and manufacturing also showed little growth, while business services and finance continued to grow strongly.”