Sterling hits five-year low against dollar

THE pound hit a five-year low against the US dollar yesterday as a sharp fall in North Sea oil and gas output in February triggered fears that Britain's economic growth slowed in the first quarter.

The pound's value has fallen against the dollarGETTY

The pound's value has fallen against the dollar

The UK's industrial output rose just 0.1 per cent on the previous month despite a 0.4 per cent bounce in manufacturing led by transport equipment, with construction falling 0.9 per cent, both well below City forecasts.

Sterling was down by more than 0.4 per cent against the dollar at $1.465 but the FTSE 100 Index of leading UK shares powered 74.41 points ahead to a record 7089.77.

Economists expect growth to have slowed from 0.6 per cent in the final quarter of 2014 to 0.4 per cent in the first three months this year.

We doubt this signals the recovery is beginning to hit the buffers. We believe the UK is on course for its best year since 2006, with GDP rising by a healthy 3 per cent

Samuel Tombs, senior UK economist at Capital Economics

The main drag on industrial output came from mining and quarrying, in particular the extraction of crude petroleum and natural gas, with North Seafocused firms squeezed by rising costs and plunging oil prices.

Martin Beck, senior economic adviser to the EY ITEM Club, described the data as "a major disappointment", although he noted more positive feedback on manufacturing and construction from purchasing managers' surveys.

He added: "The weak outturn for industrial production was heavily influenced by a hefty decline in output in the mining and quarrying sector. However, the pickup in manufacturing output was also underwhelming, with the February gain smaller than January's fall."

Samuel Tombs, senior UK economist at Capital Economics, said: "We doubt this signals the recovery is beginning to hit the buffers. We believe the UK is on course for its best year since 2006, with GDP rising by a healthy 3 per cent."

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