The UK economy grew by a better than expected 0.5% in the fourth quarter of 2017 but remains “slower and uneven”, official figures show.
Britain’s performance in the October-December period was an improvement on the 0.4% rate seen in the previous quarter but still meant that for the year as a whole, growth was at its weakest since 2012.
The pound, which in recent days has been trading at its highest levels since the Brexit vote, lifted by a cent to just under $1.43 in the wake of the figures.
Gross domestic product (GDP) rose by 1.8% in 2017, below the 1.9% pace seen in 2016, the Office for National Statistics (ONS) said.
ONS head of GDP Darren Morgan said: “Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy.”
He said the boost to the economy at the end of the year came from a range of services such as recruitment agencies, letting agents and office management though consumer-facing businesses saw much slower growth.
Manufacturing also grew strongly, though the construction sector fell, the ONS said.
Chancellor Philip Hammond told Sky News the figures were “excellent” and likely to result in improved forecasts for growth this year.
The latest quarterly number was an improvement on the figure of 0.3% seen in each of the first two quarters of 2017 and the 0.4% in the third quarter.
But annual growth has not been slower since 2012, when the economy recorded an expansion of 1.5%.
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The pace of UK growth has fallen behind that of other advanced nations in the wake of the Brexit vote.
That is partly because of the weakness of the pound making import prices higher and squeezing consumers, and partly because of business uncertainty.
The IMF expects UK growth to slow to 1.5% this year.
Bank of England governor Mark Carney told the BBC on Friday that Brexit had already knocked tens of billions of pounds off UK growth.
But he raised the prospect of a “conscious recoupling of the UK economy with the global economy” as the terms of Britain’s departure from the EU become clearer.
Ben Bretell, senior economist at Hargreaves Lansdown, said: “Despite today’s better-than-expected number, the overall picture is one of muddling through.
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“But it’s certainly fair to say the economy has performed much better than many feared in the aftermath of the Brexit vote, boosted by the rising tide of a global recovery which has lifted all boats.”
Experts were divided on what the better than-expected-figures would mean for interest rates, with some suggesting a hike in May could now be on the cards but others still seeing an increase as unlikely until November.
Source: SKY News