GDP growth falls slightly in May

GDP growth is estimated to have fallen to 0.2 percent in the three months ending in May, down from 0.4 percent in the three months to April, the National Institute of Economic and Social Research said on Wednesday.

The think tank said such low output growth could fall still further, although it believes it is unlikely that the economy would actually shrink year-on-year in 2008 compared with 2007.

"Despite the fact that the economy is now scarcely growing, we share the view that concerns about inflation make it more likely that interest rates will be raised than reduced in the coming months," it said.

The economy has been caught this year between slowing growth and rising prices which have limited the Bank of England's freedom to reduce rates to encourage spending.