Growth slows in March as Covid spending by the government decreases and impact of war weighs on economy.
UK GDP rose by 0.8% in the opening months of the year, higher despite a 0.1% decline in March output. That takes output 0.7% above Q4 2019 -- the best quarterly measure of pre-pandemic growth, the Office for National Statistics said Thursday. Services expanded by a much-lower-than expected 0.4% in Q1, well below the 0.8% predicted by City economists, contributing 0.36 percentage points to quarterly GDP. Manufacturing rose by 1.3%, while construction jumped by 3.8%.
On the expenditure side, consumption rose by 0.6%, adding 0.33 percentage points to growth. Business investment declined by 0.5%, while government spending fell by 1.7%. Net exports subtracted a whopping four percentage points from quarterly growth. Output declined by 0.1% in March, a bit below expectations, while February growth was revised to zero from the previously-reported 0.1% gain.
Lower growth in March, the first full month of the Ukraine invasion by Russia, will come as no surprise to the Bank of England, as they see growth slowing sharply through 2022, weighed largely by higher inflation, slowing household spending and the impact of the war.