Britain grows at fastest annual pace since pre-crisis

Britain's economy expanded at the fastest rate last year since before the financial crisis but growth dipped in the final quarter of 2013, official data showed on Tuesday.

  • Published: 28/01/2014 at 07:49 PM
  • Newspaper section: news

A construction worker works at the new development of the Tate Modern site in London on October 25, 2013

Gross domestic product expanded by 1.9 percent in 2013, the biggest expansion since 2007, the Office for National Statistics (ONS) said in a statement.

GDP had grown by only 0.1 percent in 2012, while the IMF recently said it expect the British economy to grow by 2.4 percent this year.

Economic output meanwhile grew by 0.7 percent between October and December last year compared with the third quarter of 2013, when GDP increased by 0.8 percent, the ONS added.

Chancellor of the Exchequer George Osborne said that overall, Tuesday's data was "more evidence that our long term economic plan is working".

He added in a statement: "But the job is not done, and it is clear that the biggest risk now to the recovery would be abandoning the plan that's delivering jobs and a brighter economic future."

Prime Minister David Cameron's coalition government has embarked on a massive austerity drive since coming to power in 2010, two years after the start of the financial crisis, in a bid to bring down a record deficit inherited from the previous Labour administration.

The fourth-quarter growth slowdown meanwhile took the shine off Britain's recent recovery.

"The 0.7-percent rise in UK GDP in the fourth quarter is a touch disappointing given the recent strength of the business surveys," said Martin Beck, economist at Capital Economics research group.

"But it still takes full-year growth in 2013 to 1.9 percent, the best performance since 2007 and possibly the strongest growth in the G7", which comprises also the United States, Germany and Japan.

In the fourth quarter, Britain achieved increases in output from the industrial and services sectors, while construction fell, according to the ONS data.

The slowdown could meanwhile dampen expectations of the Bank of England raising its main interest rate this year, analysts said on Tuesday.

Bank of England chief Mark Carney last week played down speculation that its key rate was due to rise from a record-low British level of 0.50 percent following a shock fall in unemployment.

The possibility of a rise in the bank's key rate rose after official data showed that British unemployment fell to 7.1 percent, just above the 7.0 percent threshold that Carney set as a potential trigger for a tightening of monetary policy.

In a note to clients, Barclays said it expected the Bank of England "to start hiking in the second quarter of 2015 given the strong turnaround in the economy and labour market, although ... a hike as soon as 2014 would be premature in the current environment of subdued inflation pressures and would risk choking off the recovery".

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