Britain's GDP grew 0.3 percent in the second quarter, a weaker increase from that of the previous quarter and below the central bank's projection, amid continued economic sluggishness.
The GDP growth was 0.1 percentage point higher than that of the first quarter, but did not meet the forecast of 0.4 percent by the Bank of England (BOE), Britain's central bank, according to data released by the Office of National Statistics Wednesday.
The slight increase over the first quarter was far below a growth of 0.7 percent over the quarter in the final quarter of 2016. This represents an economic slowdown from last year, as the new data will bring the annual growth rate down, below the 1.9-percent expectation of the BOE at its last forecast in May.
The growth in the second quarter was driven by services dominating the UK economy. The service sector grew 0.5 percent, with much of the improvement made in the performance of the retail sector.
"For some, the rebound in the retailing and catering/hotels sub-sectors of the services economy will serve as evidence that the consumer-led slowdown may not be too severe," said Sam Hill, chief UK economist at the Royal Bank of Canada in London.
"However, for retail and wholesale, the level of output is only the same now as it was at the end of 2016, despite the Q2 recovery, so there is some retrenchment in the sector," Hill said.
According to Hill, the extent of the slowdown in consumer spending was uncertain. The BOE's rate-setting Monetary Policy Committee (MPC) will meet early next month to decide whether to raise the current record-low interest rate from its 0.25-percent mark.
Hill said that negative real income growth, and an already low household savings ratio, meant that consumer spending would continue to constrain prospects for overall GDP growth for the rest of the year.
As the MPC meeting is approaching, Hill said, the members will have to balance a number of considerations, including an erosion of slack in the labor market versus weaker than expected incoming activity data.
"It looks as though there will be sufficient votes for the bank rate to stay on hold at the August meeting, but after that, a good deal will depend on how consumer spending shapes up," said Hill.
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