The UK remained the world’s slowest-growing major economy at the end of last year, according to new figures which leave GDP growth in the fourth quarter of 2017 unrevised at 0.4 percent.
This meant GDP increased by 1.8 percent between 2016 and 2017, slightly less than the 1.9 percent seen between 2015 and 2016, the data from the Office for National Statistics (ONS) showed. The US, in contrast, revealed the fourth-quarter economic growth of 2.9 percent yesterday.
“Among the G7, the UK was the only economy to see a deceleration in growth between 2016 and 2017, which does point to the dampening impact of Brexit-related uncertainty on UK business investment and the squeeze on consumers from the weaker pound pushing up UK import prices in 2017,” said John Hawksworth, chief economist at PwC.
UK household spending grew by 1.7 percent between 2016 and 2017, but this will be of little comfort to struggling retailers as it was the slowest rate of annual growth since 2011.
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“The fourth-quarter slowdown in consumer spending occurred as purchasing power continued to be squeezed by higher inflation and muted earnings growth,” said Howard Archer, chief economic adviser at EY’s Item Club.
Rob Kent-Smith at the ONS added: “Household borrowing increased throughout 2017, while their saving was the lowest on record. However, the UK’s deficit with the rest of the world shrank, as the UK received increased earnings on foreign investments thanks to a growing world economy.”
Services were the largest contributor to GDP. Growth occurred in transport, storage, and communications, business services and finance and government and other services, with only distribution, hotels, and restaurants seeing a decline.
Construction fared better than expected, with output estimated to have decreased by 0.1 percent rather than the previously predicted 0.7 percent.