British Economy Grows Half as Much as Forecast

The U.K. economy grew half as much as forecast in the first quarter, underscoring the fragility of the recovery as Prime Minister Gordon Brown struggles to convince voters that his party deserves a fourth term., Bloomberg 4/23/2010 11:37:49 AM

Gross domestic product rose 0.2 percent from the final three months of 2009, when a 0.4 percent expansion ended the recession, the Office for National Statistics said today in London. From a year earlier, the economy contracted 0.3 percent in the quarter.

Brown told reporters today that the economy still needs stimulus to avoid a double-dip recession” and that Conservative leader David Cameron’s plans to cut spending this year are a risk” to growth. The winner of the May 6 election will need to tackle a budget shortfall that swelled to the worst since World War II in the fiscal year through March.

Today’s report is the first of three estimates for the quarter. It uses data for the first two months of the period from about 40 percent of companies assessed, or about 40,000 businesses, and three-month figures for a further 20,000 firms.

The U.K. is the first of the Group of Seven nations to report GDP for the quarter. The economy faced headwinds from coldest winter since 1979 that snarled traffic, slowed construction and kept shoppers home, and a government increase in sales tax.

The cold snap restrained manufacturing and retail sales, the statistics office said. Industrial production, which accounts for 17 percent of the economy, rose 0.7 percent on the quarter, while services, which make up 76 percent of GDP, increased 0.2 percent. Construction slumped 0.7 percent.

British Economy Grows Half as Much as Forecast