UK economy grew in fourth quarter of 2015

GDP for the UK has grown by 0.5% in the last quarter of 2015, a rise of 1.9% year-on-year, according to the Office for National Statistics (ONS) [1].

In terms of the global economy, Britain grew faster than France and the United States across the quarter, both posting growth of 0.2%, and Germany whose growth was at 0.3% [2].

Chief Economist for ONS, Joe Grice, said: “With recent data showing weakness in the manufacturing and construction sectors, there’s been speculation the initial estimate of Q4 GDP would be revised down. But, once again, the buoyancy of the services sector has offset the relative sluggishness of the rest of the UK economy” [1].

However, economists are not convinced. Vicky Redwood, Economist at Capital Economics, warned that “the recovery remains entirely dependent on consumer spending”, and Chris Williamson, Economist at Markit, said the ONS data painted “a picture of an unbalanced economy that is once again reliant on consumer spending to drive growth, as business shows increased signs of risk aversion” [3].

Williamson said that, while the growth is good for household incomes in the short term, “for a sustainable recovery, which involves improvements in productivity and profits, we also need to see business investment revive, something which will only happen when business confidence lifts higher again” [3].

Bank of England Governor, Mark Carney, said in January 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.

You can read the ONS report here.

[1] Financial Times. ‘UK GDP grew by 0.5% in Q4, matching earlier estimates’.
[2] The Guardian. ‘UK growth confirmed at 0.5% thanks to consumer spending’.
[3] BBC News. ‘UK economic growth confirmed at 0.5%’.