On Wednesday the UK’s economic figures for the first quarter were announced, and they did not make for exciting reading. Perhaps more immediately concerning for the window and door industry are the construction figures that came with them.
UK GDP growth down to just 0.4%
The ONS announced on Wednesday morning that GDP growth in the UK economy for the first quarter was just 0.4%. This was on the back of yet another downward revision on the 2016 target, down to 2.1% over the year. With such a sluggish start in the first three months, the UK will be lucky to reach even 2% for the year.
Perhaps a more immediate concern are the figures that construction output in the first quarter dropped by 0.9%. Not good news for an economy that George Osbourne is trying desperately to balance out and remove independence away from financial services.
From the point of view of the glazing sector, when construction suffers, so does ours and all other associated industries. The ONS points out that such a drop may have a seasonal slant to it, and that things may pick up in the second quarter. However, a drop is a drop, and 0.9% is not insignificant.
No EU referendum impact
There was perhaps some cause to believe that the sluggish growth was down to the EU referendum coming up in June, and that maybe spending was being reigned in until the vote and we knew the result. However, the ONS came out on Wednesday and said that they saw no signs that this was the case, and that the slow growth was purely down to economic factors and nothing else.
This is the first of three published figures, with two more revisions to come which may alter that 0.4% slightly. But this doesn’t happen all that often and we say with some certainty that the pace of recovery in the UK economy is well a truly slowing.
So should the window and door industry be worried? I would say no for now. There are plenty of companies in all parts of our sector doing well. And I must say that at our place, the economy does feel a lot better than just 0.4% growth.
However, crunch time for the EU referendum is coming, and I would guess that as we draw closer and closer to June 23rd, we may start to see some disruption to spending if it looks like the leave vote is going to clinch it. The latest ‘independent’ poll, reported by The Independent, shows the leave campaign ahead by two points. The vote is going to be a close one, and if the UK does decide to leave, there will be a lot of economic upheaval before any sort of normality returns.
That is something we should all be concerned about.
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