David Milliken and William Schomberg London
BRITAIN’S economic growth slowed more than expected in the final three months of last year, but with annual growth still at its fastest since 2007 the data gave ammunition to both sides of the political divide heading into May’s election.
Yesterday’s data showed some loss of momentum. Growth in the third quarter fell to 0.5 percent from 0.7 percent, slower than the 0.6 percent growth most private sector economists had expected in a Reuters poll.
But for the year as a whole, the economy grew by 2.6 percent, the Office for National Statistics (ONS) said, up from 1.7 percent in 2013 and putting the economy on track to have been the world’s fastest-growing major advanced economy last year.
While most countries have not yet reported 2014 growth data, Britain’s is ahead of International Monetary Fund (IMF) estimates for other big developed nations.
“The recovery is on track and our plan is protecting Britain from the economic storm – now is not the time to abandon that plan and return Britain to economic chaos,” Finance Minister George Osborne said.
Sterling weakened against the dollar and the euro as the data reinforced views that the Bank of England is unlikely to raise interest rates this year while wage growth stays weak.
It is also unclear whether 2014’s growth marks a temporary high point as the economy finally started to rebound strongly after years of sub-par growth following the financial crisis.
The IMF forecasts growth in Britain of 2.7 percent this year. Economists polled by Reuters predict a slowdown to 2.4 percent. ONS chief economist Joe Grice said it was “too early to say” if this slowdown would persist.
“The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic,” he said.
Overall gross domestic product growth was held back by the biggest quarterly falls in construction and industrial output since 2012. – Reuters