Chancellor claims Brexit threat is ‘weighing on the economy’ as UK growth slows
Britain’s Gross Domestic Product (GDP) grew by 0.4% between January and March, down from 0.6% in the last quarter of 2015, according to figures from the Office for National Statistics (ONS).
Although the three months of 2016 showed slower growth than the previous quarter, the 0.4% rate was in line with expectations, and marks the 13th consecutive quarter of positive growth for the UK. On an annual basis, growth was 2.1%.
Chancellor George Osborne said that the fact that Britain was still growing was ‘good news’, but added that ‘there are warnings . . . that the threat of leaving the EU is weighing on our economy. Investments and building are being delayed, and another group of international experts, the Organisation for Economic Co-operation and Development (OECD) confirms British families would be worse off if we leave the EU’.
The OECD had earlier claimed that Britain leaving the EU would be the equivalent of imposing an additional ‘tax’ of one month’s income on UK workers, and that economic growth would be lower outside the EU. It suggested that leaving the EU would result in 3% lower economic growth than would otherwise be the case by 2020, rising to 5% in 2030 and costing households, on average, £3,200.
These claims were heavily criticised by Leave campaigners. Economist and Brexit campaigner, Andrew Lillico, said that the figures implausibly assumed that the UK would be unable to agree a trade deal of any kind with the EU before 2020, or preferential deals with other countries before 2023. He said: ‘One of the main reasons we would leave the EU is in order to do new trade deals with the rest of the world, with Japan, Australia and other countries’.
The ONS attributed the economic slowdown to a drop in manufacturing and construction output, but said it had no evidence for it being linked to the forthcoming EU referendum – and many economists expect growth to accelerate again this year.
Ruth Miller, UK economist at Capital Economics, said: ‘Many of the factors likely to be to blame for the first quarter’s weakness should prove short-lived. We would not be surprised if growth were to subsequently accelerate in the second half of the year, putting the economy back on track.’