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UK GDP beats forecasts but growth remains uneven UK GDP beats forecasts but growth remains uneven
(about 2 hours later)
ONS puts quarterly growth at surprise 0.5% but warns annual pace is slowest since 2012ONS puts quarterly growth at surprise 0.5% but warns annual pace is slowest since 2012
Richard PartingtonRichard Partington
Fri 26 Jan 2018 10.32 GMTFri 26 Jan 2018 10.32 GMT
First published on Fri 26 Jan 2018 09.38 GMTFirst published on Fri 26 Jan 2018 09.38 GMT
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The British economy grew at a faster rate than expected in the final three months of the year, despite pockets of weaker and more uneven growth triggered by the Brexit vote. The British economy grew at a faster rate than expected in the final three months of last year, despite pockets of weaker and more uneven growth triggered by the Brexit vote.
GDP grew by 0.5% in the fourth quarter of 2017 following expansion of 0.4% in the three months to September, according to the Office for National Statistics. City economists had forecast same-again growth of 0.4%. GDP grew by 0.5% in the fourth quarter of 2017 after expansion of 0.4% in the three months to September, according to the Office for National Statistics (ONS). City economists had forecast growth of 0.4%.
Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity.Gross domestic product (GDP) is a key government statistic and provides a measure of the UK's total economic activity.
Put simply, if GDP is up on the previous three months, the economy is growing; if it is down, it is contracting. Two or more consecutive quarters of contraction mean the economy is officially in recession.Put simply, if GDP is up on the previous three months, the economy is growing; if it is down, it is contracting. Two or more consecutive quarters of contraction mean the economy is officially in recession.
GDP is the sum of all goods and services produced in the economy, including the service sector, manufacturing, construction, energy, agriculture and government.GDP is the sum of all goods and services produced in the economy, including the service sector, manufacturing, construction, energy, agriculture and government.
Economists are concerned with the real rate of change of GDP, which shows how the economy is performing once inflation is taken into account.Economists are concerned with the real rate of change of GDP, which shows how the economy is performing once inflation is taken into account.
The Office for National Statistics produces quarterly official GDP figures about three and a half weeks after the end of each three-month period.The Office for National Statistics produces quarterly official GDP figures about three and a half weeks after the end of each three-month period.
The ONS uses three measures and they should, at least in theory, all add up to the same number.• The value of all goods and services produced - known as the output or production measure.• The value of the income generated from company profits and wages - known as the income measure.• The value of goods and services purchased by households, government, business (in terms of investment in machinery and buildings) and from overseas - known as the expenditure measure.The ONS uses three measures and they should, at least in theory, all add up to the same number.• The value of all goods and services produced - known as the output or production measure.• The value of the income generated from company profits and wages - known as the income measure.• The value of goods and services purchased by households, government, business (in terms of investment in machinery and buildings) and from overseas - known as the expenditure measure.
The ONS publishes three estimates of quarterly GDP figures. The first "flash" estimate comes out about 25 days after the quarter in question has ended. The figures usually get revised in subsequent months as more data from businesses and government departments is received. But even the third, dubbed "final", estimate of quarterly GDP is not set in stone: the Blue Book, which is published once a year, in August, contains revisions going back the last 18 years.The ONS publishes three estimates of quarterly GDP figures. The first "flash" estimate comes out about 25 days after the quarter in question has ended. The figures usually get revised in subsequent months as more data from businesses and government departments is received. But even the third, dubbed "final", estimate of quarterly GDP is not set in stone: the Blue Book, which is published once a year, in August, contains revisions going back the last 18 years.
The National Institute of Economic and Social Research's estimate comes out about three weeks before the official figures.The National Institute of Economic and Social Research's estimate comes out about three weeks before the official figures.
The ONS also calculates the size of the UK economy relative to the number of people living here. GDP-per-capita shows whether we are actually getting richer or poorer, by stripping out the impact of population changes. The ONS also calculates the size of the UK economy relative to the number of people living here. GDP-per-capita shows whether we are actually getting richer or poorer, by stripping out the impact of population changes. 
However, officials said that the rate of expansion for the year as a whole was the slowest since 2012, having fallen from 1.9% in 2016 to 1.8% last year. The ONS also said the bigger picture showed weaker and more uneven expansion. However, officials said the rate of expansion for the year as a whole was the slowest since 2012, having fallen from 1.9% in 2016 to 1.8% last year. The ONS also said the bigger picture showed weaker and more uneven expansion.
Darren Morgan of the ONS said the boost to the economy came from recruitment agencies, letting agents and office management, although he warned there was slow and unsteady growth elsewhere, particularly in consumer-facing sectors. Darren Morgan of the ONS said the boost to the economy came from recruitment agencies, letting agents and office management, adding that there was slow and unsteady growth elsewhere, particularly in consumer-facing sectors.
The UK has suffered over the past year as rising inflation prompted by the slide in the value of the pound following the EU referendum outstrips weak wage growth, denting the spending power of consumers. The UK has suffered over the past year as rising inflation prompted by the slide in the value of the pound after the EU referendum outstrips weak wage growth, denting the spending power of consumers.
“Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy,” he said.“Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy,” he said.
Hotels, caterers and transport and distribution firms recorded weaker growth due to constraints on consumer spending, the ONS said. There was also weaker growth across the car industry and for cinemas.Hotels, caterers and transport and distribution firms recorded weaker growth due to constraints on consumer spending, the ONS said. There was also weaker growth across the car industry and for cinemas.
Despite the pockets of weakness, the acceleration in the fourth quarter reflected solid expansion of 0.6% in the country’s dominant services sector. Manufacturing also had a strong quarter, rising by 1.3% on the back of a strengthening global and Eurozone economy, which has boosted UK exports. Despite the pockets of weakness, the acceleration in the fourth quarter reflected solid expansion of 0.6% in the country’s dominant services sector. Manufacturing also had an upbeat quarter, rising by 1.3% on the back of a strengthening global and Eurozone economy, which has bolstered UK exports.
Britain’s economy has proven more resilient than forecast ahead of the EU referendum 18 months ago, helped by improving economic conditions around the world. The fall in the pound following the Brexit vote also helped to boost exports. Britain’s economy has proven more resilient than forecast before the EU referendum 18 months ago, helped by improving economic conditions around the world. The fall in the pound after the Brexit vote also helped to strengthen exports.
But the economy could have performed better still without the Brexit vote, having trailed other major countries such as the US, France and Germany, which have surged ahead in recent months. The economy could have performed better still without the Brexit vote, having trailed the US, France and Germany, which have surged ahead in recent months.
The Bank of England governor, Mark Carney, said the UK should however begin to “recouple” with the world economy later this year, should the UK gain greater clarity over its future trading relationship with Europe in the Brexit negotiations. The Bank of England governor, Mark Carney, said the UK should begin to “recouple” with the world economy this year, should the country gain greater clarity over its future trading relationship with Europe in the Brexit negotiations.
Speaking from the gathering of the world’s business elite at Davos in Switzerland on Radio 4’s Today Programme, he said: “If I can use that term borrowed from Gwyneth Paltrow – [there is the prospect of] a conscious recoupling of the UK economy with the global economy.” Speaking on Radio 4’s Today Programme from the gathering of the world’s business elite at Davos in Switzerland, he said: “If I can use that term borrowed from Gwyneth Paltrow – [there is the prospect of] a conscious recoupling of the UK economy with the global economy.”
Economic growth (GDP)Economic growth (GDP)
Economic recoveryEconomic recovery
Economic policyEconomic policy
EconomicsEconomics
BrexitBrexit
Mark CarneyMark Carney
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