UK growth disappoints as election looms

Why the UK GDP miss is important
Why the UK GDP miss is important   

U.K. gross domestic product (GDP) expanded slower than expected in the first quarter, in the last major economic indicator before the country's general election in nine days' time.

A first estimate from the Office of National Statistics (ONS) showed that GDP grew by 0.3 percent quarter-on-quarter, below a forecast of 0.5 percent, according to a poll of analysts by Reuters.

Although services output increased by 0.5 percent over the period, the headline figures was pulled down by the three other main sectors. Construction fell by 1.6 percent, production slid 0.1 percent and agriculture fell by 0.2 percent, the ONS said.

The data will not be welcomed by U.K. Prime Minister, David Cameron, who has made the strength of the economy a key part of his campaign ahead of a general election on May 7. Sterling fell to $1.5185 after the data.

Responding to the data, Cameron and U.K. Finance Minister, George Osborne, said the economy was still growing, but that the recovery could not be taken for granted.

Howard Archer, chief U.K. and European economist at IHS Global Insight, said the figures would be a "jolt" for the Conservative and Liberal Democrat parties, which have governed in a coalition for the last five years.

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"Given that the Conservatives and Liberal Democrats are hoping that many undecided voters will ultimately decide to vote for them due to their management of the economy, this marked slowdown in growth is particularly unwelcome news coming just over a week before the general election," Archer said in a note Tuesday.

"However, they can probably argue with some justification that Increased uncertainty ahead of (the) general election has hampered growth, likely leading to business caution particularly on investment."

Archer added said that despite the marked slowdown in the first quarter, IHS remained "largely upbeat" about the U.K.'s growth prospects for 2015, predicting 2.4 percent GDP growth this year.