UK economic growth slows
First-quarter reports indicate consumer spending has eased amid higher living costs
by Abi Moses on 28th April, 2017 if ($blog_item->blog_updated_date != '0000-00-00 00:00:00'): ?> and updated 30th November, -0001 12:00am endif; ?>
Inflation seems to have taken a hold of the UK economy after reports of a first-quarter slowdown in growth, as the rising living costs cause consumers to ease spending.
Official figures, which are set to be released on Friday are expected to show that growth has slowed to 0.4%, compared to 0.7% in the fourth quarter of last year.
The figures weren't helped by the disappointing retail sales figures released in March. Retail sales for the first three months of the year saw its biggest fall in seven years.
Inflation is currently at its joint-highest level in over three years, reaching 2.3% in March. The overall cost of living was helped by falling fuel and flight costs but the weak Pound has hit imports, causing a sharp rise in food and clothing costs.
Members of the Financial Policy Committee (FPC) in England have warned that a rapid increase in consumer debt levels posed a risk to the UK financial system.
Howard Archer, chief UK and European economist at IHS , claimed the first-quarter slowdown was "primarily the consequence of consumers reining in their spending."
Mr Archer continued, "The first quarter of 2017 has seen inflation rise markedly higher overall, while earnings growth has been muted. Following the likely marked first-quarter slowdown, we suspect that 2017 will become even more challenging for the UK economy - and particularly for consumers as their purchasing power is squeezed harder still.
"Additionally, we expect businesses to become more cautious over investment (and employment), as the economy shows mounting signs of slowing and uncertainties over the outlook are magnified by Brexit negotiations coming increasingly to the forefront now that the Government has triggered Article 50."
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