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Latest UK economic growth lower than expected

The UK's economy expanded by 0.2 per cent in the first quarter of the year.

The rate of GDP growth for the January to March period was lower than had been anticipated on the back of a 0.4 per cent expansion in the last three months of 2009.

According to the Office for National Statistics (ONS), the economy might well have been hit by the bad weather that dogged the start of the year.

Despite the disappointing headline figure, there were more positive signs in the data.

Manufacturing output was up by 0.7 per cent in the period, one of the strongest rates of quarterly improvement for the sector in several years and almost double the previous quarter, while the financial and business services sector grew by 0.6 per cent.

Retail and leisure, however, suffered a 0.7 per cent decline.

Some analysts were not too dismayed at the data, suggesting that the poor weather had exerted an unexpected drag on the economy and that results from later in the quarter indicate a pick up in activity.

As more information becomes available, the ONS may revise its initial calculation upwards. Two further estimates from the ONS are due in May and June once it collates more data.

Commenting on the news, David Kern, chief economist at the British Chambers of Commerce (BCC), said: "Coming at the end of a week of mixed economic data, these figures are weaker than expected, but not entirely surprising. 

"Although still weak, GDP has now recovered for two quarters in a row, so it is important for policy-makers to focus on ensuring that the recovery continues and a double-dip recession is avoided. 

"As soon as the election is out of the way, it is critical for a new government to put in place a credible deficit-reduction plan that allows business to lead a sustainable recovery.  Without a credible plan, there are serious risks that the fragile economic upturn will fizzle out."