Prime minister uses worse-than-expected GDP figures to warn that a Labour government would put economic recovery at risk

Britain’s economic recovery slowed far more sharply than expected in the first quarter, dealing a major blow to the government’s track record on the economy with a little more than a week to go until the general election.

The prime minister David Cameron said the recovery could not be taken for granted after the latest official figures showed that the economy grew by just 0.3% between January and March, half the rate of the previous quarter. Economists were expecting growth of 0.5%.

It was the slowest rate of growth since the end of 2012, when there were fears Britain would tip back into recession.

Speaking in Enfield, north London, David Cameron played down the dramatic slowdown in growth and used the figures to warn that a Labour government would put the economic recovery at risk.

He said: “Our economy is growing; growing at a rate that many other European countries frankly would give their eye teeth for.



“These are one quarter’s figures. But they remind us, a timely reminder, that you cannot take recovery for granted. You take your eye off the ball on reducing the deficit, that would be bad for growth; you take your eye off the ball in being pro-business, that would damage growth.”

However, the surprisingly weak growth figure comes at an awkward time for the Conservatives, who have made the economy a major battleground in the run-up to the election.

They argue that sustainable growth is dependent on a Tory victory on 7 May, while a Labour victory would plunge the UK into economic “chaos”.

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Ed Balls, Labour’s shadow chancellor, seized on the weak data from the Office for National Statistics, saying it showed working families were still suffering at the hands of the Conservatives.



“While the Tories have spent months patting themselves on the back, these figures show they have not fixed the economy for working families.

“Tory economic policy may be helping a few at the top but for most people bills have gone up faster than wages.

“Working families can’t afford another five years of the Tories. Labour’s better plan will put working people first, make our economy stronger and ensure the recovery reaches everyone in every part of the country.”

The annual rate of growth also slowed sharply, to 2.4% in the first quarter from 3% in the fourth quarter of 2014.



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Howard Archer, chief UK economist at IHS Global Insight, described the latest growth figures as “a jolt” for the coalition parties.



“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,” he said.



The last major economic news to be published before the election showed Britain’s recovery was still heavily reliant on the consumer, with the service industry the only key sector of the economy to grow.

Services output – including bars, restaurants and hotels – grew by 0.5% over the first quarter, a slowdown compared with the 0.9% growth achieved by the sector in the fourth quarter of 2014.

Meanwhile construction output fell by 1.6%, industrial production was down 0.1%, and agricultural output shrank 0.2%.

A breakdown of industrial production showed manufacturing output grew by just 0.1%, as the government’s much-hoped-for export and factory-led recovery remains elusive. Production overall was dragged down by the mining sector and water and waste management.

The ONS said gross domestic product in the first quarter was 4% above its pre-crisis peak.

However, more than six years since the beginning of the UK’s recession, the services sector is the only major part of the economy where output has now exceeded its pre-crisis peak.

The services sector is the only major sector where output has now exceeded its pre-crisis peak

In 2012, the chancellor, George Osborne, set an ambitious target to double UK exports to £1tn by 2020, a target that now looks out of reach, according to the British Chambers of Commerce.



The Trades Union Congress general secretary, Frances O’Grady, said Britain needed a new plan for growth, based on investment in infrastructure and good jobs with decent pay.

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“The slowest recovery in modern history just slowed down again,” she said. “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.

“The makers are marching backwards, construction is slumping and it’s only services that have rescued the economy from shrinking. This is the opposite of the rebalanced economy we were promised.”

Stephen Ibbotson, director of business at the ICAEW (Institute of Chartered Accountants in England and Wales), said the slowdown in growth reflected uncertainty ahead of the election, which was dampening company spending plans.

“This is a sharp drop in GDP growth that few economists saw coming. Our research suggests that businesses have hit pause amid growing political uncertainty over what the next government may look like, and ongoing malaise in the eurozone.”