In the period between October and December 2016 the Uk’s economy grew by 0.6%, the same rate as in the previous two quarters, according to an initial estimate from the Office of National Statistics. These figures showed that the feared economic slowdown following the vote for Brexit has not materialized.
For 2016 as a whole, the economy grew by 2%, down by 2.2% in 2015. “Strong consumer spending supported the expansion of the dominant services sector”, said Darren Morgan (ONS statistician) “Although manufacturing bounced back from a weaker third quarter – both it and construction remained broadly unchanged over the year as a whole.”
The dominant services sector, which accounts for about three-quarters of the UK economy, grew by 0.8% in the quarter, helped by growth in the distribution, hotels and restaurant industry. Retail sales and travel agencies have also supported growth in this sector. The figures also showed that the construction industry grew by 0.1% and agriculture by 0.4%, while industrial production was unchanged.
Lee Hopley, chief economist of the manufacturers’ lobby group EEF said “While services continued to drive the economy forward at the end of last year, manufacturing output also made a small positive contribution, as growth ended the year on a solid note.”
However, she adds that there will be challenges in 2017.
“Consumers won’t be ramping up spending thanks to rising inflation and sluggish wage growth, and businesses’ appetite to sign off big investments will depend on how they view the progress of Brexit negotiations. “There’s every chance that this rate of expansion is the high point for the next couple of years.” That view was echoed by Rain Newton-Smith, chief economist at the CBI business lobby group. “2017 will see headwinds to growth building, as higher inflation eats into households’ buying power and investment wanes,” he said.