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The UK's economy ground to a halt over the course of the first three months of 2022, preliminary data from the Office of National Statistics showed.
For the first quarter of 2022, UK gross domestic product is estimated to have increased 0.8% versus the immediately previous quarter, which is behind market consensus - according to FXStreet - of 1.0% quarter-on-quarter expansion.
In the final quarter of 2021, the GDP grew by 1.0% on quarterly basis.
Darren Morgan, director of economic statistics at the Office for National Statistics, said: ‘The UK economy grew for the fourth consecutive quarter and is now clearly above pre-pandemic levels, although growth in the latest three months was the lowest for a year.’
The data, Capital Economics Chief UK Economist Paul Dales said, shows the UK economy has ‘less momentum’ than thought, especially considering the ‘full hit from the cost of living crisis has been felt’.
‘The risk of recession has just risen, although strong price pressures will probably mean the Bank of England will raise interest rates further,’ Dales continued.
Annually, GDP rose 8.7% in the first quarter, but this too was behind market forecasts of 9.0% growth.
The ONS noted that the economy was 0.7% bigger than its pre-coronavirus level, which covers the final three months of 2019.
However, economic performance deteriorated during the course of the first three months of this year. Monthly estimates show that GDP rose by 0.7% in January, followed by no growth in February 2022 and a fall of 0.1% in March 2022.
‘GDP would have been even weaker in March if not for the 1.7% month-on-month rebound in construction output after the drag from Storm Eunice in February faded,’ Dales added. ‘But the 1.8% month-on-month fall in consumer-facing services GDP - after a 0.7% month-on-month rise in February - is worrying. Most of it was driven by a 1.4% month-on-month fall in retail sales and a 15% month-on-month drop in motor vehicle sales.’
Turning to services and industrial production, the picture was not any brighter. In March, services output fell by 0.2% from the month before.
‘The largest negative contribution to growth was from wholesale & retail trade, which fell by 2.8%; however, this was offset by human health & social work activities, which grew by 1.5%,’ the ONS said.
In the first quarter, services output was up 0.4% sequentially, but this was sharply behind the 2.0% growth forecast.
On an annual basis, services output rose 9.9% in March, and is now 1.4% above pre-coronavirus pandemic levels.
Industrial production output fell by 0.2% from the month before, while it was forecast to grow by 0.1%. Manufacturing production was also down by 0.2% in March, when FXStreet cited consensus flat growth.
The pound was quoted at $1.2204 early Thursday, sinking to a level not seen since March 2020, and was down from $1.2323 at the London equities close on Wednesday.
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