GDP growth modest but stronger than expected

The Office for National Statistics data published today shows that the economy gradually picked up through the second half of 2017 after a subdued first half performance.

For the year as a whole GDP growth in 2017 was 1.8 per cent, a better performance than had been widely expected at the start of the year in the wake of the Brexit vote and a significant squeeze on consumer purchasing power.

However, last year’s growth was still the slowest UK expansion since 2012 and it looks somewhat uninspired compared with significantly improved global growth.

It is also notable that y/y UK GDP growth moderated from 2.0 per cent in the fourth quarter of 2016 to 1.5 per cent in the fourth quarter of 2017.

Fourth quarter GDP growth benefited from robust manufacturing output as it was buoyed by a competitive pound and healthy global growth. Services output growth picked up but construction output contracted for a third quarter.

“The boost to the economy at the end of the year came from a range of services including recruitment agencies, letting agents and office management,” said Darren Morgan, head of GDP at the ONS.