United Kingdom GDP

United Kingdom

United Kingdom: GDP growth decelerates in Q4

February 26, 2015

In the fourth quarter, GDP expanded a seasonally-adjusted 0.5% over the previous quarter, according to more detailed data released by the Office for National Statistics (ONS) on 26 February. The print was in line with both the preliminary estimate and market expectations. However, the expansion came in below the 0.7% increase observed in the previous quarter. Q4’s figure came on the back of an improvement in external demand, while the domestic demand performed worse compared to the previous quarter.

Private consumption grew a weak 0.3% in Q4, which was below Q3’s 0.7% increase. In addition, government consumption showed zero growth in the fourth quarter, which was a deterioration over the 0.5% increase observed in the previous quarter. Fixed investment swung from a 0.5% expansion in Q3 to a 0.5% contraction in Q4, thus marking the steepest decrease in over two years.

On the external side, exports rebounded to 3.5% growth in Q4 (Q3:-0.8% quarter-on-quarter), while growth in imports inched down from 1.4% in the third quarter to 1.3% in the fourth quarter. As a result, the external sector’s net contribution to growth swung from minus 0.7 percentage points in Q3 to plus 0.6 percentage points in Q4.

In annual terms, GDP grew 2.7% in the fourth quarter. The figure met the preliminary estimate and marked an acceleration over Q3’s 2.5% increase. In the full year 2014, the economy grew 2.6%, which was a significant improvement over 2013’s 1.7% expansion and marked the largest expansion in seven years.

In its latest inflation report from February, the Bank of England projects that the economy will grow 2.9% in both 2015 and 2016. FocusEconomics Consensus Forecast panelists expect the economy to grow 2.7% in 2015, which is up 0.1 percentage points from the previous month’s estimate. The panel sees GDP expanding 2.4% in 2016.

Author:, Senior Economist

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United Kingdom GDP Chart

United Kingdom GDP Q4 2014 0

Note: Quarter-on-quarter changes of seasonally adjusted GDP and year-on-year variation in %.
Source: Office for National Statistics (ONS) and FocusEconomics Consensus Forecast.

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