Britain's economy grew at its weakest pace in a year in the first quarter as consumer spending slowed to its most sluggish pace since 1997, official data showed today.
The Office for National Statistics said Gross Domestic Product rose by only 0.2 per cent in the first three months of the year, unrevised from data published last month. But the year-on-year rate was revised down slightly to 2.2 per cent from per cent.
The figures were roughly in line with market forecasts and confirm a slowing in the world's fourth-largest economy in the run-up to war in Iraq. But Britain's economy still outpaced those of European neighbours such as Germany, which has now slipped into recession.
The figures are not likely to alter the Bank of England's outlook on the economy, however, and will do little to clarify market speculation on when and if the bank will again lower interest rates.
Correspondingly, there was little market reaction to the data. British gilts were up slightly on the session while interest rate futures were unchanged. The FTSE-100 index of leading shares was off about 15 points at 3,975.
Total production fell 0.5 per cent on the quarter as manufacturing continued its slump amid widespread overcapacity and a lack of reinvestment in plants and equipment.
Sterling's fall this year against the euro had little impact on Britain's trade deficit, which continued to widen in the first quarter, reducing overall GDP growth by 0.3 per cent.