The UK’s economic growth in the last three months of 2015 has been confirmed at 0.5%- supported by steady growth in the services sector.
The growth estimate for 2015 was also unchanged at 2.2%, which was the slowest annual pace since 2012. However, the UK economy remains one of the fastest growing of the developed nations.
The ONS noted that the fourth quarter of 2015 was the 12th consecutive quarter of growth, compared with the erratic pattern of behaviour between 2009 and 2012.
ONS chief economist Joe Grice said: “Once again, the buoyancy of the services sector has offset the relative sluggishness of the rest of the UK economy.”
Output in UK’s services sector grew 0.7% in the three months to the end of December. Household spending slowed slightly in the quarter, but still rose by 0.7%.
However, the production sector and net trade dragged on growth in the final three months of 2015.
Production output, which includes heavy industry, energy and manufacturing, contracted by 0.5% in the fourth quarter compared with the previous three months.
Growth is being supported by firms increasing the wages paid to workers alongside low inflation, which is clearly good for household incomes in the short term. But for a sustainable recovery, which involves improvements in productivity and profits, we also need to see business investment revive, something which will only happen when business confidence lifts higher again.
Last month, Chancellor George Osborne warned that the economy was facing a “dangerous cocktail” of risks in 2016, ranging from slowing global economic growth to volatile stock markets and the continuing slump in oil prices.
On Wednesday, the International Monetary Fund (IMF) said the UK economy’s recent performance had been “strong”, but added that the referendum on EU membership was a “risk and uncertainty”.
The growth in the UK economy increases the workload on businesses and not just the pleasant things like more work- but more administration like payrolls, auto enrolment pensions and HMRC declarations.
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