BAD weather in the first three months of 2018 is likely to have knocked economic growth to its lowest level in a year, according to PwC.
The firm’s forecasts show that the so-called ‘Beast from the East’, which hit the UK with snowstorms earlier this year, could reduce UK gross domestic product (GDP) growth to between 0.2 per cent and 0.3 per cent for the first quarter of 2018.
That would mark a drop from the 0.4 per cent rise in economic output over the final months of 2017 and would be the lowest rate of growth since the start of last year, when GDP rose by 0.2 per cent quarter-on-quarter.
The warning from PwC comes ahead of official data from the Office for National Statistics, which will release its preliminary first quarter GDP estimate next Friday, April 27.
PwC’s forecast is similar to projections by the National Institute of Economic and Social Research (NIESR) think tank, who predicted a slowdown to around 0.2 per cent.
PwC’s chief economist John Hawksworth said: “The last time we had such significant snowfalls, in December 2010, there was a marked dip in quarterly UK GDP growth. Construction output fell sharply and retail and leisure spending was hit in the run up to Christmas. This was only partly offset by a sharp rise in energy consumption for heating.”
“This time around, the adverse effects of the snow should be less marked. Manufacturing seems to have been less affected and energy use will have increased,” he added.
Official figures last week showed that manufacturing activity declined unexpectedly in February – with factory output dropping 0.2 per cent month-on-month – while the construction sector suffered a 1.6 per cent drop, having fallen by 3.1 per cent in January, according to the ONS.
The statistics agency said it was difficult to quantify the impact of bad weather on the industry, but that poor conditions could have been responsible for the decline.
Retail sales also suffered in March as shoppers avoided the snow-covered high streets.
However, PwC said that any bad weather effects “should only be temporary” and that output was likely to bounce back in the second quarter. The company has also not changed its expectation 1.5 per cent GDO growth for 2018 as a whole.
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