The UK economy grew by 0.5% in the first quarter of the year, down slightly on economists’ estimates, the Office for National Statistics (ONS) said today.

Analysts had predicted a modest growth figure today of around 0.6% to 0.7%. UK GDP contracted 0.5% in Q4 2010, slightly ahead of previous estimates of -0.6%.

In Q3 2010, the economy grew by 0.7%. In the first quarter of last year, GDP rose 0.3%.

Although Chancellor George Osborne is likely to pounce on the figures as proof the recovery is back on track, the modest increase in GDP will also strengthen the arm of those arguing economic growth remains sluggish as the coalition’s programme of cuts and tax rises begins to bite.

Recent data has pointed to depressed levels of consumer sentiment, a slowdown on the high street and downbeat levels of activity in the construction and manufacturing sectors.

And this month, the International Monetary Fund downgraded its growth forecast for the UK this year to 1.7%, down 0.3% from its previous prediction in January.

In the March Budget, the Office for Budget Responsibility said GDP will rise just 1.7% this year, rather than the 2.1% it predicted in November.

Today’s figures – which are subject to being revised – will be keenly observed by the Bank’s Monetary Policy Committee which has indicated its decision to hold rates at their historical lows of 0.5% has largely been driven over fears the economic recovery remains shaky.

But today’s modest increase in output is unlikely to trigger a fundamental change in sentiment on the committee, which in April voted six-three against a hike in rates.