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UK GDP Growth Slows To 0.3% In First Quarter

The UK's economic recovery slowed sharply in the first quarter of the year with GDP growth of 0.3%, according to a preliminary estimate.

The quarterly figure, which is subject to revision, was much weaker than economists had predicted at half the rate of growth measured in the previous three months.

The statistics showed that the economy remained under pressure in key areas, including construction where output fell for the second consecutive quarter.

With the economy a central theme of the General Election campaign, the news was seized upon by Labour as evidence UK PLC was far from fixed in the wake of the financial crisis.

:: Economics Editor Ed Conway on why the figures represent a big blow

The Office for National Statistics (ONS) said the UK recorded its slowest growth since the fourth quarter of 2012 during the first three months of 2015, with output halving quarter-on-quarter.

The annual rate of GDP growth slowed to 2.4% from the 2.8% measured in the final quarter of 2014.

The service sector, which accounts for 75% of all goods and services in the economy, grew by 0.5% in the first quarter, slowing from 0.9% in the previous three months.

The ONS said it had charted the weakest growth in business services and finance since the end of 2010.

Industrial output fell slightly - hit by weaker oil and gas output in the North Sea as the price of oil dived on world markets.

The construction figure was the standout number, with output tumbling by 1.6% in the quarter - the industry hit by a number of factors including a shortage of skilled labourers.

However, the ONS said today's statistics showed the UK economy was 4% above its pre-crisis peak and 8.4% larger than 2010 when the coalition Government took office.

Chancellor George Osborne told Sky News: "Today is a reminder that the recovery cannot be taken for granted and that the economy is on the ballot paper at this election."

Shadow chancellor Ed Balls said working families could not afford another five years of Conservative government.

He said: "While the Tories have spent months patting themselves on the back these figures show they have not fixed the economy for working families.

The union organisation, the TUC, said the performance showed the country needed a "new plan".

Its general secretary Frances O’Grady said: "The slowest recovery in modern history just slowed down again.

"This is bad news for jobs and living standards. What’s more Conservative plans for extreme cuts after the election risk completely killing off this faltering recovery and plunging the economy back into even deeper trouble."

But the CBI's director-general, John Cridland, said: "Growth slowed but checking the temperature with our members and surveys hints that the economy is more resilient than these figures might suggest.

"Prospects for this year remain bright, with lower oil prices and inflation continuing to support growth.

"A strengthening pound means manufacturers are fighting a loss of competitiveness in the euro area, threatening to knock our exports performance."

The value of sterling against the dollar and the euro fell in the wake of the GDP figures while the FTSE 100 clawed back some earlier losses as the figures were seen as cementing expectations that interest rates will not rise until next year.