Adverse Climate Could Affect Growth in UK GDP, says PwC

The recent forecasts show that economic data continue to feel the impact of the cold weather despite the onset of the hotter spell in the United Kingdom. While the analysis of economists from PwC foresees that the GDP growth could possibly drop to 0.2 percent for the January-March period, which is lower from 0.4 percent in 2017.

The adverse climate during the months of February and March was dubbed as the “Beast from the East”, which slowed down some major parts of the economy after the heavy snow warning followed by flooding. According to John Hawksworth, PwC's chief economist, stated that the last heavy snowfall happened in December 2010, which further showed a remarkable decline in the quarterly growth of UK GDP.  Moreover, construction output decreased sharply as the retail and leisure expenditure was hit prior Christmas holiday. This was partially neutralized by the steep growth in energy consumption for heating.

Nevertheless, the cold spell this year would have less impact since the manufacturing data did not have a significant effect according to the global professional services firm, PwC. The purchasing managers index (PMI) for the sector was unchanged for the first quarter in growth territory. While most of the economists are expecting an increase in Q2 to have a strong rebound towards trend development considering that consumers are spending money they did not consume before.

PwC’s nowcast, based on the machine learning strategies linked with the latest data, presents an underlying rate increase of 0.4 percent which coincides with the last quarter. The up-to-date consensus growth forecast from the experts was secured by the Treasury and further indicates an average projection of 1.5 percent expansion in 2018 but figures were lower than 1.8 percent in the previous year. The Office for National Statistics is expected to publish its initial estimate for GDP growth in the first quarter on next Friday, April 27.