Bad weather will (temporarily) reduce UK GDP growth say forecasters
While the UK is currently enjoying the start of a hotter spell, upcoming economic data will still be feeling the effects of the recent cold snap, according to the latest forecasts.
GDP growth could fall as low as 0.2 per cent for the first quarter, down from 0.4 per cent at the end of last year, according to analysis by accountants PwC.
The adverse weather in February and March – nicknamed the Beast from the East – caused large parts of the economy to grind to a halt after heavy snowfalls followed by flooding.
John Hawksworth, PwC's chief economist, 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."
However, the this year's freeze should have less of an impact, with the manufacturing data not showing a major hit, PwC said. The closely watched purchasing managers index for the sector remained steady for the first three months in growth territory.
Meanwhile, most economists expect growth in the current, second quarter to rebound strongly towards trend growth, as consumers spend the money they did not use before.
The "nowcasts" from accountants PwC, based on machine learning techniques applied to up-to-date data, show an underlying growth rate of 0.4 per cent, in line with the previous quarter.
Policymakers and businesses should focus on "the underlying picture of continued moderate but steady UK growth”, Hawksworth said.
Economists' latest consensus forecasts of growth collected by the Treasury show an average prediction of 1.5 per cent growth in 2018, down from 1.8 per cent last year.
The Office for National Statistics will reveal its preliminary estimate of GDP growth in the first quarter on 27 April.