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UK GDP growth slows in 3 months to July, think tank says

The British economy grew by 0.2% in the three months to July after 0.3% growth in the second quarter, the National Institute of Economic and Social Research, or NIESR, said.

The drop in the pace of growth follows a slowdown in the service sector, which was the main driver for second-quarter growth.

"A modest recovery" is expected in the second half in response to strengthening global growth and a weaker pound. However, the research institute warned that consumer spending is likely to be weighed down by weak wage growth and investment spending is likely to be held back by Brexit-related uncertainty.

"Further out, we see quarterly economic growth strengthen somewhat to 0.4% to 0.5% as the economy rebalances away from domestic demand and towards net trade," Amit Kara, head of U.K. macroeconomic forecasting at the NIESR, said.

"Economic growth however, remains below its long-run average growth rate of 0.6% because of subdued productivity growth."

The NIESR projected GDP to rise to 1.9% in 2018 from 1.7% in 2017.