As UK economic growth slows, here are some thoughts from senior figures from the financial sector.
Helal Miah, investment research analyst at The Share Centre, said: “The Office for National Statistics reported this morning that the UK economy grew by 0.3% in the first quarter of 2015, which was a fairly significant miss from the consensus estimate of 0.5% and below the 0.6% of the previous quarter. These latest GDP numbers are a disappointment to the market and the weakest quarterly growth since the end of 2012.
“It was the construction sector where output fell by 1.6% which explains most of the shortfall. However, the agriculture and manufacturing sectors also fell and the increased output of 0.5% from the services sector was nothing to shout about. Investors should note that the immediate impact was a moderate fall in sterling, possibly slightly delaying any rate increase, but the larger impact of this result will be on the election campaign. Labour will no doubt say that the recovery is not as strong as the Conservatives have claimed.
“However, we do not believe that this reflects a change in the direction of economic growth and feel that these disappointing numbers reflect more temporary factors. Investors should acknowledge that the economy still is in good shape which should be helped by lower oil prices, with better expectations for some of our main trading partners including Europe.”
Nancy Curtin, Chief Investment Officer of Close Brothers Asset Management, said: “The deceleration in GDP growth will no doubt fuel the political debate in the run up to the election, but it’s unlikely to be ringing alarm bells for the majority of investors. In reality, the UK economy is among the best placed in the developed world, and annual growth of 2.4% cannot be dismissed as insignificant. Yes, retail figures have been softer than expected, manufacturing data has disappointed, and construction actually dropped in the quarter. But the positives far outweigh the negatives. The labour market is flying, with unemployment at its lowest rate since 2008, the service sector remains strong and households are increasingly confident about their spending power. On top of this, a prospective recovery in the Eurozone will buoy UK exports, while monetary policy remains supportive for growth. The forthcoming General Election continues to cast a shadow on the stock market, but the UK’s underlying economic strength should not be in question.”
