UK economic growth still slowing

The ONS said GDP growth was driven by services

The UK economy grew 0.4% in the first three months of the year, as expected, but down from 0.6% in the last three months of 2007.

The figures represented the weakest quarter-on-quarter growth since the first quarter of 2005, the Office for National Statistics said.

The annual growth rate slipped to 2.5%, below the forecast 2.6%, and against the previous rate of 2.8%.

The Bank of England has cut interest rates three times since December.

This latest data suggests that the Bank will act to cut rates again soon, analysts said, amid fears about the impact of the credit crunch on the economy.

"The marked slowdown in GDP growth in the first quarter puts pressure on the Bank of England to cut interest rates again sooner rather than later, despite current significant inflation risks," said Global Insight's economist Howard Archer.

The ONS said growth was driven by the service sector though this sector also slowed. Mr Archer added that "it appears that consumer spending made a significant contribution to growth, given that retail sales grew by 2.0% quarter-on-quarter".

Some analysts anticipate that growth could continue to slow.

"Looking ahead, the recent downturn in forward-looking indicators and the major imbalances in the economy suggest that growth could slow considerably further in the coming quarters," said Capital Economics' Jonathan Loynes.

Earlier this week, minutes revealed that the Monetary Policy Committee (MPC) was split three ways over its vote to lower interest rates to 5%.

Six members of the MPC favoured the cut, two wanted rates kept on hold and one supported a larger cut.