UK Q1 GDP growth rate confirmed at 0.2%

The final estimate from the Office for National Statistics confirmed on Friday that UK gross domestic product grew 0.2% in the first quarter, as expected.

This was down sharply from 0.7% growth in the fourth quarter of last year and a 1.9% rise on an annual basis.

Growth was driven by business services and construction, partially offset by declines in some consumer-focused industries, such as retail sales and accommodation. Growth in the services sector was revised down to 0.1% from 0.2%.

Chris Williamson, chief business economist at IHS Markit, said: "Fresh official data reveal how the economy slowed sharply at the start of the year as higher prices squeezed households, but other pockets of growth and stronger business survey data suggest the economy should have regained some momentum in the second quarter.

“The squeeze on household spending is no surprise, given recent weak wage growth and rising inflation. The squeeze may well continue through the rest of the year, as inflation looks set to rise further. The big question is whether other parts of the economy can take up the slack from squeezed households."

The pound slipped below $1.30 after the data was released.