The faltering construction industry is hindering the UK's economy recovery.

Gross Domestic Product, (GDP) only grew modestly at the start of the year, hindered by a further sharp drop in construction - but making it likely that the Bank of England will keep interest rates at record lows for some months.

GDP expanded by 0.5% between January and March, in line with forecasts, after contracting by the same amount in the final three months of 2010.

That means Britain's economy has barely grown since September and is lagging other leading economies.


Construction was the biggest drag, falling by 4.7% on the quarter and posting its worst performance since the first quarter of 2009 when Britain was deep in recession.

"GDP increased by 0.5% in the first quarter of 2011, following a decrease of 0.5% in the fourth quarter of 2010," the Office for National Statistics (ONS) said in a statement.

"The effect of the abnormal weather conditions in December 2010 is estimated to have subtracted 0.5 percent from growth in the fourth quarter.

"GDP is estimated now to have returned to the level in the third quarter of 2010," it added.

But, economists said activity was broadly flat and argued that the modest recovery was not strong enough to persuade the Bank of England to lift interest rates to combat high inflation, amid concern over deep state spending cuts and high fuel prices.

(BMcC)