UK economy at a standstill

BRITAIN'S economy stood still in the first three months of the year, revised figures showed today. The Office for National Statistics said GDP in the first quarter was 'broadly unchanged' on the previous three months, compared with earlier estimates of a 0.1% rise.

The revision means the economy has failed to grow for two successive quarters - the weakest performance since 1991.

Today's deceleration was blamed on a downturn in the finance and business services sectors and lower output in manufacturing industries.

Falls in the number of transactions on the stock market hit the City while there was also a slump in advertising, security, legal services and recruitment. Household expenditure rose by 0.7% in the quarter compared with a 0.9% increase in the final three months of 2001.

The ONS said that despite today's revision annual GDP growth remained unchanged at 1%.

Chancellor Gordon Brown forecast growth of between 2% and 2.5% for 2002 in his April Budget, but City experts said it looked increasingly unlikely the target would be met. Philip Shaw chief economist at Investec said he would be cutting his forecast for this year from 1.5% to 1.4% following today's revision. 'It looks as if the Chancellor's growth forecast will not be met,' he said.

He added: 'Essentially the UK economy was a whisker away from recession at the turn of the year but we remain confident that with manufacturing sentiment on the rise and household spending continuing to be strong the recovery will proceed fairly strongly.'

A Treasury spokesman said: 'Slow growth in the first quarter of 2002 reflects the slowdown in the world economy and the effects of increased uncertainty following September 11. There are now clear signs of improving confidence and activity in the US and Europe, and we expect UK growth to accelerate through the year as the recovery in the world economy gathers pace. In UK, recent surveys show that prospects for manufacturing are improving and consumption growth remains robust.'