The UK economy, struggling with supply chain disruptions and high energy prices, expanded by 1.3% in the quarter, down from growth of 5.5% in the previous three-month period when many coronavirus restrictions were lifted.
The Office for National Statistics (ONS) said Thursday that services drove growth in the quarter, led by spending on accommodation and food. But the wholesale and retail trade shrank by 2.5%, hurt by weak consumer spending. Manufacturing output also fell slightly.
“The UK’s still won back less of the output lost in the pandemic than either the eurozone or the US,” said Kit Juckes, a strategist at French investment bank Societe General.
Kallum Pickering, senior economist at Berenberg, said UK growth was “slightly below” his bank’s own 1.4% prediction, but added that the country remained “on track” to return to its pre-Covid level of GDP in the first quarter of 2022.
“While private consumption and government spending expanded at faster rates than we had anticipated, business investment and exports disappointed,” he added in a note on Thursday.
Pickering pointed out that global supply chain issues and shortages were only part to blame for a slowing UK economy, adding that business investment had slumped after the Brexit vote in 2016, before collapsing during the pandemic.
“The UK’s unique Brexit-related issues and higher non-tariff barriers with its biggest market (the EU) no doubt amplify the port and transport challenges,” he said.
The United Kingdom suffered a bigger contraction than any other G7 country last year at 9.7%, and so has further to climb to return to its pre-pandemic size.