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UK GDP drops to 1.5%

Britain’s economy recorded its weakest year-on-year growth since 2013 in the three months to the end of June, and the major services sector contracted in July, showing a possible loss of momentum as the Bank of England prepares to raise interest rates for the first time in a decade.

Official data showed year-on-year gross domestic product growth slowed to 1.5 percent in the second quarter from 1.8 percent in the first three months of the year.

This bucked economists’ expectations in a poll for it to be unchanged from an earlier 1.7 percent estimate.
The quarterly growth rate was unrevised at 0.3 percent, the Office for National Statistics said.

After faster than expected growth in 2016, Britain’s economy has underperformed its peers so far this year as the effect of a weaker currency since last year’s Brexit vote catches up with consumers.

Today’s data confirms that growth in the first half of 2017 was the slowest for the first half of any year since 2012.
The Bank of England has said it expects to raise interest rates in the coming months to tackle rising consumer price inflation, which it expects will exceed 3 percent in October.

Most economists expect a rate rise will come after the BoE’s next Monetary Policy Committee meeting on Nov. 2.

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