UK economic growth slowed sharply in the fourth quarter of last year - falling back below its long-term average as manufacturing achieved only marginal expansion and construction output tumbled - official figures have revealed.
Figures published yesterday by the Office for National Statistics showed UK gross domestic product grew by 0.5 per cent in the fourth quarter of 2014. GDP had increased by 0.7 per cent in the third quarter, and by 0.8 per cent in the three months to June.
The 0.5 per cent quarter-on-quarter growth in GDP in the final three months of last year equates to an annualised pace of two per cent. This is well adrift of a historical average annual rate of growth for the UK put at about 2.75 per cent by Bank of England Governor Mark Carney.
Fourth-quarter GDP growth was weaker than the 0.6 per cent rate forecast by economists. It was also the slowest quarterly expansion since the final three months of 2013.
The manufacturing sector grew by just 0.1 per cent in the fourth quarter, highlighting the extent to which Chancellor George Osborne's March 2011 vision of "a Britain carried aloft by the march of the makers" has failed to materialise.
A 0.6 per cent tumble in output of the mining and quarrying category, which takes in oil and gas extraction, played a part in a 0.1 per cent fall in overall industrial production during the final three months of last year. This was the worst quarterly movement in industrial production since the fourth quarter of 2012.
The services sector expanded by 0.8 per cent in the fourth quarter. However, construction sector output tumbled by 1.8 per cent, its sharpest quarterly fall since the second quarter of 2012.
Taking 2014 as a whole, the UK economy grew by 2.6 per cent. This was the UK's best growth in any year since 2007, but was adrift of what had been forecast by economists before a recent raft of economic releases signalling the recovery has been losing momentum.
Calum Bennie, a savings expert at Scottish Friendly, said: "Recent reports suggest that the changes to benefits and direct taxes have hit families harder than any other group and that the country's poorest have struggled as a result."
He added: "The non-service sector of the economy is not as buoyant as it could be and economic difficulties in the eurozone are likely to impact on the UK. As such, a note of caution is advisable when it comes to growth."
Samuel Tombs, senior UK economist at consultancy Capital Economics, highlighted the UK's relatively strong growth in 2014 as a whole,
He said: "Admittedly, the economy's growth in 2014 has been partly driven by some unsustainable stimuli, including households saving less...And the UK's General Election looks likely to lead to a hung parliament, which could foster a period of political uncertainty that dampens investment and confidence.
" Nonetheless, with the recent halving of oil prices providing a timely boost to households' discretionary spending power, credit still becoming cheaper and pay growth on an improving trend, we think that GDP growth could pick up to three per cent this year."
Commenting on the composition of fourth-quarter growth, Mr Tombs said: "The output breakdown showed that the recovery has narrowed to become entirely dependent on growth in services sector output."
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