‘This weakness is likely to be blamed on Brexit. That is probably fair.’ – Alan Clarke, Scotiabank
The British economy expanded at a slower than expected pace in the three-month period to March, as consumers began feeling the impact of rising inflation amid the sharp fall in the value of the Pound. The Office for National Statistics Reported on Friday that the economy grew 0.3% in the Q1 of 2017, compared to a 0.7% growth pace posted in the final quarter of 2016. Meanwhile, market analysts expected the economy to expand at a 0.4% rate in the reported quarter. Friday’s data confirmed an economic slowdown driven by the country’s decision to leave the European Union. Some analysts suggested that the upcoming UK General Election also added to economic weakness. Therefore, according to their forecasts, the British economy is set to expand 0.2% in the Q2 of 2017. Since Britain’s decision to withdraw from the EU inflation rose to 2.3% and many analysts expect it to reach 3% in the upcoming months. On an annual basis, the economy expanded 2.1%, up from a 1.9% pace registered in the Q4. That marked the strongest pace of growth since the Q2 of 2015. Both Bank of England and IMF expect the economy to grow 2.0% this year, while the majority of analysts see weaker growth this year. The services sector, which account for 70% of GDP, grew 0.3% in the Q1, the weakest since 2015.
