Growth figures show signs of rebalancing
Latest estimates from the Office for National Statistics have confirmed that the UK's economy grew by 0.7 per cent in the fourth quarter of last year.
That's in line with analyst estimates, who expected no change from the initial estimate.
The ONS noted that "there have been encouraging signs recently across the three approaches to measuring GDP" as services output has passed its pre-crisis peak. But 2013's overall growth estimate has been revised down from 1.9 per cent to 1.8 per cent.
UK construction growth has been revised up to 0.2 per cent (from -0.3 per cent) for the final quarter of 2013, while new data shows business investment rose by 2.4 per cent in that period.
Total business investment grew by 8.5 per cent in the year to the fourth quarter – an encouraging sign for those worried that investment has been lacking from the UK's recovery.
Samuel Tombs, UK economist at Capital Economics, says that the figures show "further rebalancing of the economy".
"Looking ahead, further gains in employment, easing credit constraints and a return to rising real pay should ensure that the recovery maintains the fourth quarter’s pace in 2014," says Tombs.
Nominal GDP figures released today also showed strength, increasing at annualised rate of eight percent in the fourth quarter of 2013. The Adam Smith Institute's head of macro policy Ben Southwood says that nominal GDP "is getting back to the short of level which will allow real wages and prices to adjust properly."
""Economists agree that wage and price stickiness is the reason that aggregate demand, matters so much for the overall health of the economy. Faster NGDP growth means lower unemployment of both people and capital," says Southwood.
This morning investment bank UBS raised its 2014 UK growth forecast from 2.5 per cent to 2.8 per cent, and its 2015 forecast from 2.5 per cent to 2.7 per cent.