UK growth hits five-year low of 0.1% as business investment falls – as it happened

Economists warn that Britain's economy is losing momentum after growth almost stalled in the first three months of the year

• BREAKING: UK only grew by 0.1% in the first quarter of this year
• Business investment fell, construction sector shrank
• This is the second estimate of UK GDP in Q1 2018
• ONS: The economy performed poorly last quarter
• Last night, Bank of England governor issued new Brexit warning

2.16pm BST

Time for a quick recap.

Remember, our economy and the UK GDP isn't tanking because of multinational companies already fleeing Britain en masse due to #Brexit and hard-working families driven to hunger by #Austerity.

It's because of those three days months ago where it snowed a bit. pic.twitter.com/hP6sJiGGWh

Praise for the ONS should be in order. Since the Brexit vote, the ONS has really stepped up its game as the median difference between the first and the revised reading for annual GDP growth is zero(!).

In other words, the professional work of the ONS suggests that UK policymakers, already consumed by Brexit-related uncertainty, do not have to deal with big data revisions that would challenge further their policy decisions."

"The ONS left their estimate of first quarter GDP growth unchanged at 0.1%, with construction and retailing being the main sources of weakness on the output side. They also continued to downplay the negative influence of adverse weather conditions on the figures, in contrast to the views of the Bank of England and indications from some business surveys that this was a more significant factor.

"On the expenditure side, subdued growth of consumer spending of just 0.2% was an important factor behind the slowdown, although retail sales bounced back strongly in April so we expect somewhat stronger growth in the second quarter.

1.55pm BST

Newsflash: US durable goods orders sank by 1.7% last month, a bigger fall than expected.

The decline was driven by a 29% plunge in orders for civilian aircraft - a volatile area (as airlines typically make large orders occasionally).

Durable-goods orders sink 1.7% in April, but strip out Boeing planes and the numbers look pretty good, esp biz investment. Takeaway: U.S. economy doing fine and 2nd quarter likely to be stronger https://t.co/scNQ5MqQNJ pic.twitter.com/T17qrg1pjQ

1.24pm BST

The opposition Labour Party blame government cutbacks for Britain's slowdown.

Jonathan Reynolds MP, Shadow Treasury Minister, says:

"This second GDP estimate confirms that this is the weakest Q1 growth since 2012 with business investment falling.

"It's no good for the Chancellor to blame this on bad weather when even the ONS said in their initial estimate that this had a limited impact. The truth is that continued Tory austerity cuts are weakening growth.

1.18pm BST

Back in the financial markets, the euro has hit its lowest level since last November as political tensions swirl in Italy and Spain.

The single currency has shed half a cent against the US dollar to $1.166, as investors worry that the eurozone crisis is flaring up again.

Man was never going to down without a fight

SPAIN'S RAJOY SAYS HE AIMS TO COMPLETE HIS FOUR-YEAR TERM

#SPAIN 10-YEAR YIELD RISES 10BPS - BBG pic.twitter.com/ThgTYfwu8O

Two landmarks for Italian govvie bond spreads today: 200bps over Germany for the first time since Jan, and more strikingly 100 bps over Spain for the first time since the end of the euro zone debt crisis in 2012. https://t.co/dYe4DjUwVF pic.twitter.com/ysaxeOic7G

12.41pm BST

Newsflash: UK home furnishing's chain Dunelm has just dropped a nasty surprise on the City - a profits warning.

It's another sign that consumer spending in the UK is fragile, with wages only growing slightly faster than inflation.

Dunelm has just warned on profits after a fall in store like-for-likes and lower footfall. Profits will be "moderately below" last year's.

'We have seen an unexpectedly challenging start to the fourth quarter, with continuing softness in the homewares market and reduced footfall to our stores.

12.23pm BST

Britain's growth report doesn't look too good when compared to other major economies.

With quarterly growth of 0.1%, and annual growth of 1.2%, the UK is behind most of its rivals.

11.43am BST

Our economics correspondent, Richard Partington, says today's GDP report will fuel fears over the UK economy.

He writes:

The weakest household spending for three years and falling levels of business investment dragged the economy to the worst quarter for five years, official statisticians have confirmed.

The Office for National Statistics confirmed its previous estimate that GDP growth slumped to 0.1% in the first quarter, while sticking to its view that the "beast from the east" had little impact.

Related: UK economy posts worst quarterly GDP figures for five years

11.13am BST

Liberal Democrat MP Layla Moran blames the government's (mis)handling of the Brexit negotiations for the slowdown in growth

"Brexit is the backdrop for these poor figures and the government only has it's itself to blame. It's negotiations have been a total shambles.

"Weak household spending and business investment are both factors directly related to the country's vote to leave the European Union. Businesses are reluctant to spend on new offices and equipment while Brexit remains so uncertain.

10.47am BST

Lee Hopley, chief economist at EEF, the manufacturers' organisation, sees 'few crumbs of comfort' in today's new growth figures.

The weak 0.1% expansion was confirmed, with the detailed breakdown showing more of the same subdued growth in household spending and small declines in both exports and business investment.

"Taking together the forces of Brexit uncertainty, softening indicators in overseas markets and consumers that have yet to regain their mojo, it is hard to see what will spur some renewed momentum in the economy over the next couple of quarters.

10.39am BST

There's not much in today's GDP report to justify an imminent rise in UK borrowing costs.

Anthony Kurukgy, Senior Sales Trader at Foenix Partners, says interest rates could stay on hold at 0.5% until 2019.

If Bank of England Governor Mark Carney was hoping for a surprise uplift in the latest GDP estimate this morning, he was dealt yet another blow. The latest reading, which came in line with market expectations (0.1%) reaffirms the UK Central Bank's views that a combination of stagnated growth and 'softer' data will only keep the likelihood of UK interest rate hikes on hold.

With the 'unreliable boyfriend' at the helm, there's an argument to say that one interest rate rise in 2018 isn't exactly a forgone conclusion.

10.29am BST

Howard Archer of the EY ITEM Club says Britain's economy seems to have lost momentum since the start of 2018:

Here's his take on today's GDP figures:

10.26am BST

The Office for National Statistics isn't pulling its punches -- it says Britain's economy put in a poor performance at the start of this year.

The ONS's head of GDP Rob Kent-Smith said:

"Overall, the economy performed poorly in the first quarter with manufacturing growth slowing and weak consumer-facing services. Oil and gas bounced back strongly, however, following the shutdown of the Forties pipeline at the end of last year.

"While there was some evidence of the poor weather hitting construction and high street shopping, this was offset to an extent by increased energy supply and online sales."

10.16am BST

Britain's hotels and restaurants were the worst-performing part of the UK services sector in the last quarter.

The ONS reports:

10.03am BST

Bloomberg points out that UK household spending rose at the slowest rate since 2015 - a sign that consumers are cautious.

They say:

U.K. consumer spending lost momentum in the first quarter and companies cut investment after severe weather swept the country.

Household spending rose just 0.2 percent, the weakest performance in more than three years, and business investment declined 0.2 percent as snowstorms kept shoppers at home and hit construction projects.

9.57am BST

Here's some instant reaction to the UK growth figures:

Should Chancellor be feeling more Eeyore than Tigherish?...new estimate from @ONS confirm GDP grew by just 0.1% in Q1 - & in fact GDP per head FELL 0.1%. & can't all be blamed on weather

#UK Q1 GDP growth confirmed at 0.1%q/q. Another weak quarter for household spending, although it provided the largest contribution. Slump in construction and slowdown in (mainly consumer-facing) services output. Combination of bad weather, weaker sentiment and falling real wages. pic.twitter.com/XVlu38ELyk

UK GDP growth unrevised at 0.1%q/q in the first quarter of 2018. For the 6th quarter in a row, households contribution to growth was 0.2%q/q. Slowdown in quarterly growth came from investment outwith business investment or inventories. No boost or drag from net trade. pic.twitter.com/3srQdMErw9

9.55am BST

The ONS also insists that we can't blame the Beast from the East for the slowdown.

It says:

While the bad weather had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited, with partially offsetting impacts in energy supply and online sales.

9.49am BST

Today's figures also confirm that Britain's economy actually shrank in the first three months, once you adjust for population changes.

GDP per capita shrank by 0.1% between the fourth quarter of 2017 and the first quarter of 2018, the ONS says. Effectively we all became a little poorer.

9.46am BST

9.38am BST

Newsflash: It's official, UK growth slowed to just 0.1% in the first three months of 2018.

The second estimate of GDP, just released, confirms that growth slowed to a five-year low in the first three months of this year.

9.30am BST

One of the most disastrous retail ventures in recent years is over.

Overnight, Australia's Wesfarmers offloaded the Homebase DIY chain for a nominal 1, two years after buying it for 340m - chucking out its furnishings and aiming for a hard-core DIY audience.

Wesfarmers had intended to spend 500m giving the Homebase chain a facelift, turning it into a British version of its successful Australian DIY chain Bunnings, which is famous for low prices and sausage sizzles.

But in a tough UK market, where the entire DIY sector is under pressure and there is heavy competition from the likes of B&Q, Argos, Wickes and the supermarkets, it has struggled to get a foothold and suffered heavy losses.

Related: Homebase sold to Hilco for 1 after Australian group pulls out

9.16am BST

Just in: German business confidence was unchanged in May, following five months of declines.

9.04am BST

Last month, the first estimate of GDP showed that the UK economy only grew by 1.2% over the last 12 months.

If that's confirmed at 9.30am, it means Britain has been one of the slowest-growing major economies in the last year.

Second estimate of UK GDP due out today. 22 out of 34 OECD countries have reported Q1 2018 economic growth figures. UK's 1.2%y/y currently puts it third from bottom, with only Japan and Denmark faring worse. pic.twitter.com/Dr4eOPKEtS

8.53am BST

Britain's FTSE 100 stock index has risen by 31 points (or 0.4%) to 7749 as traders await this morning's GDP figures.

European markets are also gaining ground; Germany's DAX and France's CAC are up around 0.5%.

8.16am BST

Today's growth figures come just hours after the Bank of England's governor warned of the economic costs of a disorderly Brexit.

From a monetary policy perspective, the bank is ready for Brexit.

Although the exact policy response cannot be predicted in advance, observers know from our track record that, in exceptional circumstances, we are both willing to tolerate some deviation of inflation from target for a limited period of time and that there are limits to that tolerance

Related: Bank ready to act if UK faces disorderly Brexit, Mark Carney says

8.00am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Never mind GDPR. What really matters today is GDP - and whether Britain really slipped to the brink of stagnation at the start of 2018.

Markets price in the probability of at least one #BankOfEngland rate hike by year-end at 61.9%.

All eyes are on UK GDP data due at 8:30 GMT to direct further speculation - https://t.co/IzmRYLWjvh

Today's second estimate of Q1 GDP is expected to come in at 0.1% unchanged from the previous estimate and given the poor weather in March it would be a surprise if any of the other indicators were revised higher, though we could see exports revised up to 0.5%.

#FTSE100 called +45pts at 7763 after NK offers olive branch and Carney keeps GBP on the back foot with disruptive Brexit rate cut comment, although lower oil weighs pic.twitter.com/RxKzUom417

There is fairly light data-driven event risk today; UK GDP and US durable goods orders are the only things worth tracking. #markets