UK economy slows as Brexit weighs on consumers
Britain’s economy slowed in the first three months of the year as concerns about the U.K.’s exit from the European Union spurred inflation and forced consumers to rein in spending.
The economy grew 0.3 percent from the previous quarter, slower than the 0.4 percent forecast, the Office for National Statistics said Friday. The pound has fallen about 20 percent against the dollar and euro since Britain voted to leave the EU, pushing up the cost of many imported goods.
In another signal that what was once the fastest-growing major economy is hitting the skids, Britain’s second-biggest mortgage provider said Friday that house prices fell for a second consecutive month.
“Rising inflation is eating into household spending power and that now looks to be holding back GDP considerably,” Paul Sirani, chief market analyst at Xtrade, said in a note to investors. “The marked dent in GDP stems from consumers tightening their belts in the face of rising living costs and businesses becoming more cautious over investments.”
Until recently, Britain’s economy has defied expectations of a post-Brexit slump, leading the government to attack opponents for being overly pessimistic. The economy expanded 2 percent last year, the fastest rate among the Group of Seven industrialized nations.