THE pace of economic growth slowed during the first three months of the year as high-tech industries were hit by the slowing global economy, official data has revealed.

Provisional figures from the Office for National Statistics (ONS) showed that gross domestic product (GDP) grew by an estimated 0.3 per cent in the first quarter of the year, compared to 0.4 per cent in the previous three months.

The last time GDP fell below 0.3 per cent was the end of 1998, and the dip, below city expectations, is likely to increase calls for a further cut in UK interest rates.

GDP in the quarter was 2.5 per cent higher than a year earlier, which was again below city forecasts.

The ONS said manufacturing output dropped during the first quarter as high-tech industries, which had fuelled previous growth, were now showing falls in production. The mobile phone and optical networking industries were hardest hit.

Construction and mining output also fell over the previous quarter.

Output across the service sector, the one most likely to be hit by the foot-and-mouth crisis, grew by 0.7 per cent, in line with expectations.

Estimates from MAFF showed that agricultural output actually rose during the first three months of the year, despite the widespread culling of livestock, because of increased milk production.

But the catering sector, including hotels, restaurants, pubs and clubs, registered a "clear decline" in the quarter compared to the previous three months, the ONS said. Recreation, sport and cultural activities also fell, the first quarterly decline in this category for over a year.

Despite the fall in output, Chancellor Gordon Brown feels the economy can weather the difficulties in the international situation.

"In the face of global instability, British economic policy is much better placed than it has been in the past and we are on course to continue to deliver stability and sustained growth," he said.

Simon Rubinsohn, chief economist at stockbroker Gerrard, said he now expected a further quarter point cut in interest rates in two weeks' time.

"The manufacturing sector is clearly verging on recession," he said.

"Significantly the ONS suggested that during the first three months of the year, the foot-and-mouth epidemic had little impact on agricultural output.

"This implies the underlying picture may be a little weaker than was generally anticipated."