LONDON (Reuters) – British financial development unexpectedly picked up velocity within the final three months of 2017, in line with official information which confirmed the impression of Brexit nonetheless weighing on the economic system however not as closely as as soon as feared by buyers.
Gross home product grew at its quickest tempo of the 12 months, rising by zero.5 p.c from the earlier three months. That was quicker than the median forecast for quarterly development to stay at zero.four p.c in a Reuters ballot of economists.
However, the Office for National Statistics mentioned the large image remained considered one of a slower and extra uneven enlargement within the world’s sixth-biggest economic system.
In 2017 as an entire, development was 1.eight p.c in contrast with 1.9 p.c in 2016, higher than many forecasters had predicted on the time of the Brexit referendum however the slowest since 2012.
Sterling added to its latest robust rise towards the U.S. greenback and likewise climbed towards the euro. British government bond costs briefly pared their good points.
“Today’s data is another positive surprise for the economy that puts pressure on the Bank of England to raise interest rates for a second time sooner rather than later,” Jasper Lawler, head of analysis at London Capital Group, mentioned.
The BoE mentioned final month it anticipated the economic system would possibly have slowed barely in late 2017. Its curiosity rate-setters are as a result of announce their subsequent resolution on borrowing prices on Feb. eight.
They raised charges for the primary time in additional than a decade in November. Most economists have mentioned they count on the following fee hike in late 2018 however some suppose it might come as quickly as May.
Britain’s economic system grew extra weakly than different large wealthy nations for a lot of final 12 months because the impression of the 2016 Brexit vote pushed up inflation and plenty of companies turned cautious forward of the departure from the European Union in March 2019.
However, Britain has been helped by the restoration within the world economic system final 12 months which is anticipated to hold on in 2018.
Bank of England Governor Mark Carney mentioned earlier on Friday Britain’s economic system might begin to develop extra shortly later this 12 months, if there may be readability about Britain’s future relationship with the EU.
BIGGER PICTURE – STILL SLOWER
“Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy,” ONS statistician Darren Morgan mentioned.
While recruitment businesses, letting brokers and workplace administration corporations helped enhance development, corporations which relied on spending by customers had a a lot slower fourth quarter.
Manufacturers, who have ridden the wave of robust demand from the restoration within the global economic system, additionally grew strongly.
“If the world economy is really picking up, the UK probably should be performing even stronger than it currently is, and highlights what the UK might lose out from in the event that it has to renegotiate all its trade deals once again,” Commerzbank economist Peter Dixon mentioned.
Compared with the identical interval in 2016, development between October and December slowed to 1.5 p.c, its weakest tempo because the first quarter of 2013 and down from development of 1.7 p.c within the third quarter.
The Reuters ballot had pointed to development of 1.four p.c.
Friday’s information confirmed Britain’s dominant companies sector grew by zero.6 p.c within the fourth quarter, gaining tempo after development of zero.four p.c within the third quarter, the ONS mentioned.
In November alone, companies output development was the strongest since August 2016, leaping by zero.four p.c from October. The ONS mentioned it was anticipating no month-to-month development in companies in December given the dimensions of November’s enhance.
Industrial output slowed to indicate development of zero.6 p.c from 1.three p.c within the third quarter after the Forties oil pipeline, Britain’s greatest, was closed for greater than two weeks in December after the invention of a crack.
Britain’s building sector shrank by 1.zero p.c, its worst quarterly efficiency because the third quarter of 2012.
The preliminary estimates of GDP don’t embody a breakdown of spending, and are closely based mostly on estimated information.
Writing by William Schomberg; Editing by Janet Lawrence