UK growth hits the skids

Published:  23 April, 2010

UK: Britain's gross domestic product expanded 0.2% in the first quarter of 2010, the Office for National Statistics said today.

That compares with growth of 0.4% seen in the final three months of 2009, when the UK emerged from its deepest peacetime recession since the 1930s. Economists had been expecting growth of 0.4%.

January's cold weather, which saw heavy snowfall across the country, held back manufacturing and consumer spending, the ONS said. Industrial production grew 0.7%; the services sector, which makes up the largest share of the economy, edged up 0.2% while the construction sector contracted by 0.7%.

Inflation in the UK, as measured by RPI, rose to 4.4%, from February's 3.7% figure.

The rising costs in energy and travel were drivers for this rise in both inflation measures, with RPI inflation also being driven further upwards by a rise in mortgage costs.

UK unemployment is at its highest level in nearly 16 years, with the rate of unemployment in February being 8.0% and rising by 43 000 over the quarter reaching a total of 2.5 million.

Total retail sales volumes for March 2010 were 0.4% higher than the previous month but were 2.2% higher than March 2009 with fuel and household goods' rises driving retail sales growth.   

The Council of Mortgage Lenders reported that gross mortgage lending rose 24% in March 2010, compared to the previous month and a 3% rise from the same month one year ago.

Property transactions in March 2009 were 1% lower than the previous month. However, transactions still remain 25% higher than the same month one year earlier.

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