Falling investment, weak household spending drag on UK economy
* GDP growth in Q1 confirmed at +0.1 pct qq
* Worst performance for business investment since mid-2015
in Q1
* Household spending rises at slowest annual rate in 6 years
* ONS says not just bad weather behind weak growth
(Adds economist comment, market reaction, details)
By Andy Bruce and William Schomberg
LONDON, May 25 (Reuters) - Falling business investment and
the weakest household spending growth in more than three years
marked a bad start to 2018 for Britain's economy, as official
data on Friday confirmed it almost stagnated.
Despite the Bank of England's doubts, the Office for
National Statistics (ONS) stuck to its view that bad weather
alone could not explain why the economy grew just 0.1 percent
between January and March, its weakest performance since 2012.
Instead, the ONS said it saw a longer-term pattern of
slowing growth, especially among consumers who were hit by a
rise in inflation after the 2016 Brexit vote.
With Britain's exit from the European Union due in less than
a year and the shape of their future relationship still
uncertain, business investment dropped 0.2 percent
quarter-on-quarter, its worst performance since mid-2015, the
ONS said.
Net (LSE: 0LN0.L - news) trade failed to contribute to growth and household
spending edged up only 0.2 percent on the quarter, the weakest
increase since the fourth quarter of 2014.
"Overall, the economy performed poorly in the first quarter,
with manufacturing growth slowing and weak consumer-facing
industries," ONS statistician Rob Kent-Smith said.
Separate figures from banking industry body UK Finance
showed slow growth in consumer lending in April and a
YouGov (LSE: YOU.L - news) /Cebr survey showed a decline in household confidence
ahead of Brexit.
BoE Governor Mark Carney has said business investment would
normally be growing much more strongly as the world economy
prospers and was being held back by uncertainty about Brexit.
Britain's economy stood 1.2 percent larger in the first
quarter than its level a year ago. Only Japan has grown more
slowly among the Group of Seven rich countries.
"The first-quarter figures probably overestimate the picture
of underlying softness in the (British) economy and we should
expect a bit of a rebound in the second quarter," Berenberg
economist Kallum Pickering said, pointing to a recent easing of
inflation and a rise in wage growth.
Sterling and British government bonds were little changed by
the data.
Earlier this month the BoE (Shenzhen: 000725.SZ - news) said it expected growth in the
first quarter would eventually be revised up to 0.3 percent.
It has pencilled in quarterly growth of 0.4 percent for the
current April to June period.
Still, after the weak first-quarter figures from the ONS,
the BoE chopped its forecast for annual average growth in 2018
to 1.4 percent from 1.8 percent previously -- in line with the
consensus of economists polled by Reuters.
The ONS said household spending was just 1.1 percent higher
in the January to March quarter than a year earlier, the weakest
annual growth in six years.
The economy was helped by a 0.5 percent quarterly rise in
government spending, the largest since early 2016.
(Writing by Andy Bruce
Editing by Catherine Evans)