The UK economy was the worst performer in the European Union in the opening months of 2017 as the Brexit vote took its toll, according to official statistics that underscore the challenge facing the next British government.
With economic growth of just 0.2% in the first three months of this year, the UK was well behind its European neighbours. Official EU figures released as Britons went to the polls on Thursday showed the growth for the whole of the EU was 0.6% in the first quarter. The eurozone single currency bloc also grew 0.6% in the opening quarter, buoyed by strong domestic demand.
The Eurostat figures showed every nation in the 28-member bloc reported first-quarter GDP figures growing faster than the UK. The strongest expansion was in Romania at 1.7%, followed by Latvia at 1.6% and Slovenia at 1.5%. The closest countries to the UK’s weak pace of growth were France and Greece, with GDP growing 0.4% in both.
However, in year-on-year terms the UK was closer to the EU performance and ahead of the 19-nation eurozone. After a strong second half to 2016, when the economy defied predictions of a post-referendum slump, UK GDP was still 2% bigger in the first quarter of 2017 than a year earlier. The EU’s economy was 2.1% bigger on the year while the eurozone was up 1.9%.
Recent business surveys have suggested the UK economy has picked up some momentum in the second quarter after its slow start to 2017. But with higher #inflation weighing on consumer spending, most forecasters expect growth to be lacklustre over 2017 as a whole and even weaker in 2018.
The main pressure is expected to come from higher inflation, stemming largely from the pound’s sharp fall since the Brexit vote last year. That has made the many imported goods to the UK more expensive and been passed on to consumers. Wages meanwhile have failed to keep pace with those price rises and so workers are worse off in real terms and have been cutting back.