UK Economy Slows Sharply Ahead of Election, Brexit Talks

By Jason Douglas and Wiktor Szary Features Dow Jones Newswires

The U.K. economy slowed sharply in the first quarter as consumers pared back spending, a warning sign on growth ahead of a national election in June and the start of Britain's exit talks with the European Union.

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The British economy expanded at a quarterly rate of 0.3% in the first quarter of 2017, the U.K.'s Office for National Statistics said Friday, less than half the speed of the 0.7% expansion recorded in the final three months of last year. It was the weakest quarterly expansion since the first quarter of 2016, and fell short of the 0.4% expected by economists polled by The Wall Street Journal.

On an annualized basis, growth slowed to 1.2% from 2.7%, the ONS said.

The slowdown was driven by softness in services, especially retail, and disappointingly slow growth in manufacturing, which had been benefiting from an accelerating world economy and a weakened pound.

The data highlight how British consumers, whose resilience in the months after June's Brexit vote powered the economy in 2016, have been reining in spending as a bout of inflation stoked by a battered currency squeezes household budgets.

Write to Jason Douglas at jason.douglas@wsj.com and Wiktor Szary at wiktor.szary@wsj.com

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(END) Dow Jones Newswires

April 28, 2017 04:53 ET (08:53 GMT)