Beast from the East saw UK GDP growth slip to just 0.3% in first quarter, suggests research

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Severe bad weather could have reduced UK GDP growth to 0.2 to 0.3 per cent in the first quarter of 2018, according to new research.

Economists at PwC estimated that underlying economic growth had remained steady at 0.4 per cent and that any economic impact from heavy snow and ice should be temporary.

PwC kept its growth forecast for 2018 unchanged at 1.5 per cent and it predicts the economy will bounce back in the second quarter.

Construction output slipped by 1.6 per cent in February and was 3 per cent lower than in the same month a year ago, the Office for National Statistics reported last week. That downward trend is likely to continue into March, according to PwC’s model, which uses data from a number of frequently released indicators. Some parts of the service sector – which makes up the majority of the UK economy – will also be negatively affected, the research suggests.

The ONS will release its quarter-on-quarter GDP growth figures on 27 April.

John Hawksworth, chief economist at PwC, said that the last time the UK experienced significant snowfalls, in December 2010, there was a marked dip in GDP growth.

“Construction output fell sharply and retail and leisure spending was hit in the run up to Christmas. This was only partly offset by a sharp rise in energy consumption for heating,” he said.

“This time around, the adverse effects of the snow should be less marked. Manufacturing seems to have been less affected and energy use will have increased.”

Mr Hawksworth said monetary policy and business planning decisions should, therefore, focus on the “underlying picture of continued moderate but steady UK growth”.

The UK experienced the coldest start to March on record, with wintry conditions causing disruption across the travel network and leaving hundreds stranded on the roads.

That came after snow blanketed parts of the country in the final week of February as the Beast from the East cold front swept in from Russia, sending temperatures plummeting well below zero.

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Source link: http://www.independent.co.uk/news/business/news/uk-gdp-growth-down-beast-from-the-east-bad-weather-pwc-research-a8306616.html

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