UK remains fastest growing economy in western world

Posted 2017/01/26

UK Economy

LONDON, Jan 26: Britain’s economy grew by 0.6pc in the final three months of 2016, again defying predictions of a slowdown.

That matches the 0.6pc growth rate recorded in the three months before the EU referendum, and again in the three months following the vote.

As a result the economy expanded by 2pc over the year, the fastest pace among the G7 group of major developed economies, according to the first estimates from the Office for National Statistics.

That is down slightly from 2.2pc in 2015 and from 3.1pc in 2014.

Economists had anticipated growth could slow to 0.5pc for the fourth quarter of the year.

The services sector led the expansion, growing by 0.8pc.

Manufacturing was a close second at 0.7pc, though the production industries – which includes manufacturing as well as extractive operations such as oil production and mining – did not grow or shrink on the quarter.

Agriculture grew by 0.4pc while construction output barely budged, rising 0.1pc in the three-month period.

“Strong consumer spending supported the expansion of the dominant services sector and although manufacturing bounced back from a weaker third quarter, both it and construction remained broadly unchanged over the year as a whole,” said Darren Morgan, head of GDP at the Office for National Statistics.

Philip Hammond, the Chancellor, said the figures put the UK in a good position for the challenges ahead, as the UK prepares to leave the EU.

“Every major sector of the economy grew last year, which is further evidence of the fundamental strength and resilience of the UK economy,” he said.

“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.”

Economists expect growth to slow further in 2017, with the average forecast anticipating GDP will expand by 1.4pc this year.

“We’d caution against complacency. Consumers won’t be ramping up spending thanks to rising inflation and sluggish wage growth, and businesses’ appetite to sign off big investments will depend on how they view the progress of Brexit negotiations,” said Lee Hopley, chief economist at the manufacturing industry body EEF.

“There’s every chance that this rate of expansion is the high point for the next couple of years.” THE TELEGRAPH

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