Britain's GDP slows in fourth quarter, undermining Osborne's positions, but annual growth is fastest since 2007 crisis
Britain’s economic recovery slowed in the fourth quarter of 2014, however annual growth was the fastest since the financial crisis of 2007. A slowdown to 0.5% from 0.7% in third quarter was disappointing for City analysts, says The Guardian.
Coming 100 days before the general elections, the evidence of a slowdown is a blow to George Osborne.
However, the chancellor seized on news that, at 2.6% in 2014, the UK’s growth was the “fastest of any major economy”. That also marked the strongest growth since 2007.
Official figures showed that in the final three months of 2014, however, GDP growth slowed to a quarterly rate of 0.5%. That was slower than third-quarter growth of 0.7%, and disappointed City analysts, who forecast 0.6%.
According to the chief economist of the Office for National Statistics Joe Grice, it was “too early to say” if the slowdown evident in the fourth quarter would persist. The slowest quarterly growth for a year knocked the pound, which weakened against the dollar and against the euro.
Growth in the fourth quarter was reliant on the UK’s dominant services sector, where output grew by 0.8%. In a blow to Osborne’s ambitions to rebalance the economy away from a heavy reliance on consumer spending, construction output shrank by 1.8% and manufacturing fell by 0.1%.
EEF, the manufacturers’ organisation, expressed concern about the recent slowdown in some sectors:
“The UK has an enviable performance compared with most other
developed economies, but there was some notable weakening, not least in
parts of manufacturing, through the second half of 2014,” said Lee
Hopley, chief economist at EEF.
“With UK manufacturers entering 2015 in a more cautious mood, given some of the risks in the global outlook, the next 100 days of election campaigning need to shed more light and certainty on the priorities for business growth, investment and job creation.”
The opposition also focused on those areas of the economy that struggled in the final quarter last year.
Labour’s shadow chancellor, Ed Balls said:
“Construction is down again, business investment under this government is lagging behind our competitors and exports are way off target.”
