UK GDP: The economy grew faster than expected in the fourth quarter of last year
The UK’s economy grew 0.5 per cent in the fourth quarter, an official estimate has suggested, higher than economists had expected
Fourth-quarter figures from the Office for National Statistics (ONS) showed growth was up on the third quarter’s figure of 0.4 per cent.
However, the estimate put growth for the whole of 2017 at 1.8 per cent, lower than the previous year’s figure of 1.9 per cent.
The news pushed an already strong pound even higher against the dollar, to $1.4272 – 0.9 per cent up.
The ONS said 1.3 per cent growth in manufacturing had pushed the figure higher, although the construction sector contracted for the third quarter in a row, falling one per cent. The services and production sectors rose 0.6 per cent, while agriculture fell 0.4 per cent.
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But economists warned a rate rise could put the kybosh on stronger growth.
“As a central case markets should more fully price in the risk of two UK bank rate rises this year,” said David Owen, chief European financial economist at Jefferies.
“The UK has clearly slowed from prior to the UK referendum but so has growth in supply potential and wages seem to be picking up momentum again.”
“The overall picture is one of muddling through,” added Ben Brettell, senior economist at Hargreaves Lansdown.
“Growth still looks lacklustre – and somewhat unevenly distributed – with the year-on-year figure of 1.5 per cent the weakest since the first quarter of 2013.
“But it’s certainly fair to say the economy has performed much better than many feared in the aftermath of the Brexit vote, boosted by the rising tide of a global recovery which has lifted all boats.
“Bank of England governor Mark Carney said in Davos recently that he expects the UK economy to ‘recouple’ with the global economy this year as Brexit negotiations provide greater clarity over our future trading relationship with Europe.”
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