UK GDP grows 0.1 in Q1 2023, matching forecasts
Economy unexpectedly shrank by 0.3 in March
Strikes and weak retail weigh on economy
GDP remains 0.5 below Q4 2019 level

LONDON, May 12 Reuters Britain39;s economy grew sluggishly in early 2023, better than the shallow recession once expected, but an unexpectedly sharp drop in output in March underscored how fragile its recovery remains.

Gross domestic product GDP edged up 0.1 in the first three months of the year, official data showed on Friday, the same tepid pace as in the final quarter of 2022 and in line with economists39; forecast in a Reuters poll.

Output was 0.2 higher than a year earlier, the Office for National Statistics said.

But GDP in March alone dropped 0.3, compared with poll forecasts for it to hold steady. While industrial output and construction grew, the much larger services sector dropped 0.4, reflecting weak car sales and retail, hurt by unusually rainy weather and high inflation.

Widespread industrial action also weighed on economic activity in the first quarter, the statistics office said.

With the key services side of the economy continuing to slow in the face of higher borrowing costs and rising prices, it still feels like we39;re walking through treacle, said Tom Stevenson, personal investing director at fund manager Fidelity International.

Britain39;s inflation rate topped 10 in March double the level in the United States and higher than the euro zone39;s too and on Thursday the…