Britain’s economic growth could be hit by Brexit, Chancellor George Osborne has again warned, after figures showed that the UK economy slowed in the first quarter of this year.
The Office for National Statistics (ONS) said gross domestic product (GDP) grew by 0.4 per cent in the first three months of 2016, down from 0.6 per cent in the fourth quarter of last year.
Mr Osborne said: “It’s good news that Britain continues to grow, but there are warnings today that the threat of leaving the EU is weighing on our economy. Investments and building are being delayed, and another group of international experts, the Organisation for Economic Co-operation and Development (OECD), confirms British families would be worse off if we leave the EU.
“Let’s not put the strong economy we’re building at risk, and vote to Remain on 23 June.”
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Earlier yesterday, the head of OECD said leaving the EU would be the equivalent of imposing a “tax” of one month’s income on UK workers.
The downward impact on UK growth was driven in part by a poor performance from the manufacturing industry, which fell by 0.4 per cent in the first three months of the year compared with a 0.1 per cent rise in the quarter before. Overall production was down 0.4 per cent between January and March.
The construction industry also dropped back in the first quarter, falling 0.9 per cent compared with an increase of 0.3 per cent in the fourth quarter.
But Britain’s dominant services sector, which accounts for more than 78 per cent of the UK economy, made strong ground, lifting 0.6 per cent in the first quarter.
It came as the index for services showed that output increased by 0.1 per cent between January and February this year, the same level of growth as between December and January after the ONS revised down its figure by 0.1 percentage points.
Mounting gloom over the global economy, Britain’s forthcoming referendum on Europe and market volatility have dealt a blow to business confidence in recent months.
It has left the Bank of England in no hurry to raise interest rates from 0.5 per cent.
Bank governor Mark Carney warned last week that uncertainty around the EU referendum was beginning to hamper UK economic growth.
Mr Carney also reaffirmed concerns raised by the Bank’s Monetary Policy Committee earlier this month, stating that there was “some softening in growth during the first half of 2016” due to uncertainty surrounding Britain’s vote on the EU.