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Latest GDP figures show annual growth is weakest in nearly three years

The UK economy has grown by 0.5% in the final quarter of 2015, up from 0.4% from the third quarter and in line with economists’ predictions. Annual growth has slowed to 1.9%, compared to the fourth quarter in 2014, marking the slowest increase since early 2013 [1].

The Office for National Statistics (ONS) has also reported that the services sector grew by 0.7% and agriculture grew by 0.6%. The production sector shrank by 0.2% and construction decreased by 0.1% [2].

The outlook is positive, with growth in the dominant services sector, which accounts for around 80% of the economy [2]. The figures are likely to ease fears over Britain facing an economic slowdown.

Bank of England Governor, Mark Carney, said last week that he wanted to see above-average growth and a pick-up in wages before looking into raising interest rates. Economists are not expecting the Bank to move rates before the end of the year [3].

Vicky Redwood, of Capital Economics in London, said: “Carney’s conditions for raising interest rates, which include growth looking strong enough to eliminate the remaining slack in the economy, are probably still not met. The recovery still looks very unbalanced” [4].

Last week, the International Monetary Fund forecast that Britain’s economy would maintain an annual growth rate of 2.2% through 2015, 2016 and 2017; a figure that is slightly above the average for other advanced economies [3].

Overall data from ONS for 2015 shows Britain’s economy has grown 2.2%, slightly down from 2.9% in 2014 [3]. Chancellor George Osborne described the growth as “steady” and that “despite turbulence in the global economy, Britain is pushing ahead” [5].

 

[1] ONS. ‘GDP preliminary estimate, quarter 4 (Oct to Dec) 2015’. ons.gov.uk

[2] The Guardian. ‘Eurozone crisis: Business live’. theguardian.com

[3] Reuters. ‘UK annual GDP growth slows to weakest in nearly 3 years in Q4’. uk.reuters.com

[4] Bloomberg. ‘UK economy gains momentum with services dominating growth’. bloomberg.com

[5] Telegraph. ‘UK growth slows in 2015 despite pick-up in final quarter’. telegraph.co.uk