Skip to main content

UK GDP slows to 0.3%: Is the UK sailing against the wind?

Stock photo london skyline orange sunset sky garden city summer sun 450766765 1

As the media has reported today, the UK’s GDP growth has slowed from 0.7% to 0.3% for the first quarter of 2017. Such news about GDP growth triggers two responses:

1. Business as usual

One view is that the slowdown in growth represents typical quarterly volatility. The government's view is that the economy is in good shape, so there is no reason to doubt or attach higher risks to economic growth.

2. Something's causing the change

The other line of assessment focuses on the causes for the fall in the growth rate and attempt to uncover persistent risks to economic growth. The investment community will see the news as a signal for further investigation. The main question of concern is; are there strong headwinds causing the slowdown?

Information to feel the current pulse of the economy and its strength in coming quarters will partially be generated by sentiment and expectation surveys, and the economic sentiment indicator jumped in the first quarter of 2017, denoting stronger economic activity ahead. In early April, the Markit/CIPS UK services PMI indicated strong growth in services including financial services.Consumer confidence did not deteriorate further in the last quarter of last year or the first quarter of this year. The figure is indeed lower year on year, and it is attributed to higher inflation and adverse impact on real incomes.

First quarter GDP growth figures are more reflective of the consumer and retail trade side of the economy that have made negative contributions to GDP growth. Business survey readings so far this year are not consistent with near economic stagnation in the coming quarters.

Published 28 April 2017

You might also like

On the odds of no-deal Brexit

3 July 2019
Dr Ioannis Oikonomou discusses the latest story on the Brexit leadership, behavioural biases and the repetition of history.
Business News

The ICMA Centre ranked 2nd for employability by The Times Good University Guide 2011

20 September 2010
The ICMA Centre has been ranked 2nd for employability by The Times Good University 2011*. This ranking demonstrates the emphasis the Centre places on producing graduates with skills and knowledge of real value to institutions in the financial markets.
Rankings news

Ten Years On: The Run on Northern Rock

21 September 2017
Some ten years ago almost to the day, a dramatic and unusual event occurred in the UK’s financial system: a run on a bank. The bank concerned was Northern Rock. ‘The Rock’ was formerly a building society and had converted to a plc in 1997 as part of the wave of building society demutualisations.