UK economy grew by 0.6% in final quarter of last year

26 Jan 17

The UK economy grew by 0.6% in the final three months of 2016, on par with the two previous quarters, according to provisional estimates from the Office for National Statistics.

Services played a major role in driving the growth, particularly consumer-focused industries such as retail and travel.

By contrast, the construction and production sector provided only “negligible” contributions to growth, the ONS said.

Across 2016 as a whole, economic growth is estimated at 2%, slightly down on the 2.2% achieved in 2015 but significantly down on the 3.1% in 2014.

Chancellor Philip Hammond said the growth figures demonstrated the “underlying strength and resilience” of the economy.

“There may be uncertainty ahead as we adjust to a new relationship with Europe, but we are ready to seize the opportunities to create a competitive economy that works for all,” he added.

Ben Brettell, a senior economist at investor Hargreaves Lansdown, said the British economy “continues to surprise on the upside” and was not yet showing any damage following the Brexit vote last June.

“Initial GDP estimates should always be taken with a pinch of salt, as they are based on less than half of the data which will ultimately be available, and are therefore subject to revision in the coming months,” Brettell said.

“Nevertheless it’s difficult to interpret today’s figures as anything other than good news for the UK economy, which is now 8.7% larger than its pre-crisis peak in 2008 and continues to rank amongst the fastest growing major economies.”

Analysts Capital Economics noted that, at 0.6%, growth was above consensus but predicted a slowdown for 2017. Rising inflation would “take some the steam out of household spending”, however, the slowdown is not expected to be too severe.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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