The UK economic growth picked up slightly in last three months of the year compared to the previous quarter, data revealed on Thursday. This compares to a growth of 0.4 percent in the third quarter. Services increased by 0.7% and agriculture increased by 0.6%.
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Weaker construction and production output are the primary reasons for the slowdown, which could prompt concerns that the United Kingdom economy’s reliance on the services sector is increasing further. United Kingdom manufacturing growth has also been sluggish. And while low oil prices are a boon for the economy as a whole, businesses in the North Sea industry are suffering. Despite economic instability in China, and business uncertainty ahead of a vote on Brexit, British GDP continues to grow, albeit at a slower rate. “And we are still more optimistic than most about the prospects for growth next year”. Growth should continue – as long as businesses aren’t spooked by the challenges ahead – through investment in infrastructure, technology, and most importantly, people.
“Your interpretation of today’s GDP figures will depend on whether you take a “glass half full” or a “glass half empty” view of the United Kingdom economy”, he said.
Oil prices have collapsed by more than 70% since their peak of around 115 U.S. dollars a barrel in summer 2014 to around 32 United States dollars a barrel. Christmas retail sales figures disappointed, manufacturers have been showing signs of struggling with tough export markets and construction output has dipped.
The pound strengthened against the dollar after the data met market expectations. The bigger picture is that growth remains lacklustre, but reasonably resilient.
“So we doubt we will see a strong pick-up in growth this year”. Emerging markets in general are weakening, while the Eurozone struggles to make ground after the debt crisis in the region.
The UK economy has slowed since last summer and this month Chancellor George Osborne said the UK faced a “dangerous cocktail of new threats” from such as falling commodity prices, recessions in Brazil and Russian Federation and rising tensions in the Middle East. Sterling’s strength hasn’t helped with the country’s exporters either.
“The figures are likely to ease worries that Britain is facing a sharp economic slowdown as domestic demand appears to have remained resilient”, Reuters added.
The official figures follow mixed reports on the economy in recent weeks. As recently as November the Office for Budget Responsibility had forecast that the United Kingdom economy would grow 2.4% in 2015, but it soon became clear that forecast would be missed.
“The first rate hike is not priced in until November 2017”. But Q4 was the fourth consecutive quarter to see growth fall short of that threshold.
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Brettell added, ‘In 2015 as a whole the United Kingdom economy grew 2.2 per cent – significantly less than the 2.9 per cent posted in 2014. Services were the only major part of the economy to see output rise.
