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UK economy hit by rising imports


UK economic growth slowed considerably in the first quarter of 2015, with a sharp increase in imports to blame.

Analysts were surprised by the figures, as they expected the initial growth estimate to be revised to around 0.4%. However, the Office for National Statistics (ONS) said that the UK economy grew by just 0.3% in the first quarter, which is in comparison to 0.6% growth in the final quarter of last year.

They said that exports fell by 0.3% and imports increased by 2.3%, suggesting that UK businesses may be struggling to sell their products and services abroad.

Additionally the services sector grew by just 0.4%, which is the smallest growth figure since 2012. This is particularly worrying, as this sector accounts for around three quarters of UK output.

The ONS also revealed that the trade deficit increased from £9.6bn to £13.2bn from the end of the fourth quarter of 2014, which has resulted in 0.9% being deducted off the UK GDP rate.

Positive future for UK economy

Despite these disappointing figures, many analysts and economists remained particularly positive about the future of the UK economy.

David Tinsley, an economist at UBS said that whilst the figures were “a little disappointing”, we should “expect some strengthening in performance, with the service sector regaining some traction."

Other economists agreed that with this sentiment included David Kern, chief economist at the British Chambers of Commerce (BCC). Mr Kern said that if you “dive into the detail” then are some positives within the headline figures, such as an increase both production and construction.

He continued to say that the GDP figure “understates the true momentum in the economy”.

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