The British economy expanded 0.4 percent on quarter in the first three months of 2016, slowing from a 0.6 percent growth in the previous period and matching preliminary estimates. Household spending continued to support growth while exports shrank and business investment contracted for the second straight quarter amid uncertain results for the EU Membership referendum.
Household spending was up 0.7 percent, slightly up from a 0.6 percent growth in the previous quarter and boosted by consumption of housing, water, gas, electricity and other fuels. Government spending also went up at a faster 0.4 percent (0.3 percent in Q4 2015) while consumption of non-profit institutions serving households slowed (0.3 percent from 0.7 percent).
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Gross fixed capital formation rebounded and was up 0.5 percent, following a 1.1 percent drop in the last three months of 2015. Investment in transport equipment was the main contributor to the rise (up 31.5 percent) followed by private sector costs of ownership transfer on non-produced assets (up 7.1 percent) that hit the largest level since the second quarter of 2008. However, business investment fell 0.5 percent, following a 2 percent decline in the previous period, reaching the lowest level since the last quarter of 2014.
Exports fell back into contraction (-0.3 percent from 0.1 percent in the previous period) and imports rose at a slightly slower 0.8 percent (from 0.9 percent). As a result, the trade deficit widened to GBP 18 billion from GBP 16.4 billion.
Year-on-year, the economy expanded 2 percent, lower than a 2.1 percent initial estimate and 2.1 percent in the previous period.