The British economy grew slower than previously thought in the first quarter of 2005 as consumer spending slowed almost to a standstill.
The British Office for National Statistics said today that it had revised down GDP growth by a tenth of a point to just 0.4 per cent in the first three months of the year.
The annual growth rate suffered an even sharper downward revision, to 2.1 per cent, the lowest in more than two years, from 2.7 per cent estimated last month as past data was revised up.
Growth in 2004 has been revised up 0.1 percentage points to 3.2 percent, in 2003 by 0.3 percentage points to 2.5 per cent and in 2002 by 0.2 percentage points to 2.0 per cent.
But the deflator over the last few years has been revised down, suggesting the growth-inflation trade-off is even better than previously thought.
The pound fell to an eight-month low against the dollar while short sterling interest rate futures rallied as the data boosted market expectations that the Bank of England would cut interest rates in the next few months.
Household expenditure, the key driver of the economy, rose just 0.1 per cent on the quarter, the weakest rate since the fourth quarter of 2000.
The sharp slowdown seen since the turn of the year is now even more marked as the revisions suggest consumers played a yet bigger part in the economic expansion of the last few years than previously thought.