UK economy unexpectedly expands in Q4

(Sharecast News) - The UK economy unexpectedly grew in the fourth quarter, according to figures released on Thursday by the Office for National Statistics. Gross domestic product rose 0.1% in the three months to December, beating expectations for a 0.1% contraction.

ONS director of economic statistics Liz McKeown said: "The economy picked up in December after several weak months, meaning, overall, the economy grew a little in the fourth quarter of last year.

"Across the quarter, growth in services and construction were partially offset by a fall in production. GDP per head, in contrast, fell back slightly in the quarter.

"In December wholesale, film distribution and pubs and bars all had a strong month, as did manufacturing of machinery and the often-erratic pharmaceutical industry. However, these were partially offset by weak months for computer programming, publishing and car sales."

Paul Dales, chief UK economist at Capital Economics, said the 0.1% quarter-on-quarter rise in GDP in Q4 "leaves the economy all-but stagnating" as businesses adjust to higher taxes and more uncertainty from overseas.

"We aren't expecting the economy grow much at all in the coming quarters," he said.

"After stagnating in Q3, the economy was saved from the same fate in Q4 (or worse) by a 0.4% m/m rise in GDP in December (consensus +0.1%, CE -0.1%).

"That's pretty much the only growth there's been for a while as it explains all of the 0.4% rise in GDP since Labour came to power in July and the 0.3% gain since last April."