UK economy suffers its biggest Brexit setback

A British slowdown is bad news for Irish exporters...

The UK economy grew by 0.3% in the first three months of this year, according to worse-than-expected official figures suggesting a Brexit-linked slowdown.

The British Office for National Statistics (ONS) said retail sales were the biggest drag on first quarter growth, which came in at its weakest level since the EU referendum. This could be bad news for Irish exporters.

Irish tourism figures released yesterday showed a significant drop in the number of tourists coming to Ireland from Great Britain.

The first estimate - which is subject to revision as more information becomes available - marked a sharp slowdown on the 0.7% expansion achieved in the final quarter of 2016 when the economy had continued to defy pre-vote predictions of a recession in the event of a Leave win.

Economists had been expecting a growth figure of 0.4% at the start of the year amid clear evidence of a squeeze on household budgets.

The ONS had previously reported the biggest fall in trade for retailers in seven years over the same three months.

It was a result of rising prices, reflecting higher import costs for stores feeding through to customers as a consequence of the pound's slump in value since the referendum.

The annual rate of inflation currently stands at a three-year high of 2.3% - with wage rises standing at 2.2% - the disparity highlighting the growing erosion of household spending power.

Grocery bills are on the march despite a rumbling supermarket price war while energy firms have piled on the misery, citing higher costs for raising standard tariffs.

The ONS said: "There were falls in several important consumer-focused industries, such as retail sales and accommodation; this was due in part to prices increasing more than spending."

 

Reporting by IRN and Joseph Conroy