UK Q4 GDP Annual Growth Revised Down to 5-1/2-Year Low

The British economy expanded by 1.4 percent year-on-year in the fourth quarter of 2017, below a preliminary estimate of 1.5 percent and compared with an upwardly revised 1.8 percent growth in the previous period. It was the weakest pace of expansion since the second quarter of 2012.

On the expenditure side, household expenditure rose 1.4 percent, compared with 1.3 percent in Q3; and gross fixed capital formation went up at a faster 3.8 percent (vs 3.4 percent in Q3) as business investment growth picked up to 2.1 percent (vs 1.9 percent in Q3). Also, government spending grew by 0.9 percent, faster than 0.3 percent in the previous period.

Imports jumped 4.2 percent, following a 1.6 percent gain in Q3; while exports rose at a slower 1.7 percent, after increasing by 7.2 percent the previous period. As a result, the trade deficit widened to £12.237 billion from £8.543 billion in Q4 2016. 

On the production side, the service industries expanded 1.4 percent, the same as in Q3, as output rose for: transport storage and communications (2.3 percent vs 2.7 percent in Q3); business services and finance (2.2 percent vs 1.7 percent); and government and other services (0.7 percent vs 0.1 percent). By contrast, distribution, hotels and restaurants contracted by 0.1 percent, after growing by 1.7 percent. Industrial production went up 2.3 percent (vs 2.6 percent in Q3), as output rose for: manufacturing (3.4 percent vs 3.6 percent); mining and quarrying (1.4 percent vs -2.7 percent); and water supply, sewerage, waste management and remediation activities (0.6 percent vs 1.8 percent). Meanwhile, electricity, gas, steam and air conditioning supply fell 2.1 percent (vs 1.5 percent in Q3). Construction expansion slowed to 0.9 percent from 4.8 percent in Q3.

In 2017 as a whole, the GDP grew by 1.7 percent, also below the flash estimate of 1.8 percent and compared to 1.9 percent in 2016. It was the weakest growth rate since 2012, as household consumption rose at a slower 1.8 percent (vs 3.1 percent in 2016) and government spending increased by only 0.3 percent (vs 0.8 percent in 2016). Meanwhile, fixed investment surged 3.9 percent (vs 1.8 percent in 2016), with business investment rebounding 2.2 percent (vs -0.5 percent in 2016). Net trade also contributed positively, as exports jumped 5 percent (vs 2.3 percent in 2016) and imports advanced 3.5 percent (vs 4.8 percent in 2016). Thus, the trade deficit narrowed to £40.404 billion from £46.912 billion in 2016. 

UK Q4 GDP Annual Growth Revised Down to 5-1/2-Year Low

ONS | Joana Ferreira |
2/22/2018 10:37:09 AM