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| UK economy defies Brexit fears as growth hits one-year high - live updates | UK economy defies Brexit fears as growth hits one-year high - live updates |
| (35 minutes later) | |
| 12.16pm GMT | |
| 12:16 | |
| Business investment suffers first annual fall since 2009 | |
| Business investment in the UK fell by 1.5% during 2016, a decline of £2.7bn, according to new ONS figures. | |
| That’s the first annual decrease in business investment since 2009, after the financial crisis. | |
| The ONS says firms cut their investment in buildings, machinery, and information and communication technology. | |
| TUC General Secretary Frances O’Grady fears the knock-on impact on productivity, employment and wages. | |
| “It’s very worrying to see that business investment is already falling with the challenges of Brexit ahead. If this trend continues, working people will pay the price through weaker wages and fewer jobs. | |
| “Despite a modest boost to public investment last year, UK investment still lags behind the world’s leading industrial nations. With private sector investment in retreat, the Chancellor must focus on closing the gap with our competitors in next month’s budget. This would help protect jobs and wages, and it would give a much needed boost to business confidence.” | |
| This chart shows how business investment has been lacklustre recently. | |
| Updated | |
| at 12.28pm GMT | |
| 11.36am GMT | 11.36am GMT |
| 11:36 | 11:36 |
| The momentum in the UK economy at the turn of the year continues to surprise to the upside, says Sam Hill of Royal Bank of Canada. | The momentum in the UK economy at the turn of the year continues to surprise to the upside, says Sam Hill of Royal Bank of Canada. |
| But he expects growth to slow in the current quarter, to around +0.4%, because: | But he expects growth to slow in the current quarter, to around +0.4%, because: |
| ...higher inflation and Brexit uncertainty present on-going headwinds to consumer spending and business investment, which the erratic contribution from the external sector is unlikely to compensate for. | ...higher inflation and Brexit uncertainty present on-going headwinds to consumer spending and business investment, which the erratic contribution from the external sector is unlikely to compensate for. |
| 11.16am GMT | 11.16am GMT |
| 11:16 | 11:16 |
| Ben Chu of the Independent has created a handy graph, showing how business investment has tailed off: | Ben Chu of the Independent has created a handy graph, showing how business investment has tailed off: |
| ...and business investment estimated to have fallen 1% in Q4 2016 pic.twitter.com/2VOcCUtfHA | ...and business investment estimated to have fallen 1% in Q4 2016 pic.twitter.com/2VOcCUtfHA |
| 11.15am GMT | 11.15am GMT |
| 11:15 | 11:15 |
| The weak pound helped to cushion Britain from the Brexit vote shock, says Nancy Curtin, Chief Investment Officer at Close Brothers Asset management. | The weak pound helped to cushion Britain from the Brexit vote shock, says Nancy Curtin, Chief Investment Officer at Close Brothers Asset management. |
| “The improved GDP revision for the final quarter of 2016 confirms that it was business as usual for the UK economy, despite the UK’s momentous vote to leave the EU. The lower pound appears to have acted as shock absorber and continues to aid industrial activity and exports. The UK is also in a fortunate position of capitalising on any pick up in global growth given that 70% of its market is international. | “The improved GDP revision for the final quarter of 2016 confirms that it was business as usual for the UK economy, despite the UK’s momentous vote to leave the EU. The lower pound appears to have acted as shock absorber and continues to aid industrial activity and exports. The UK is also in a fortunate position of capitalising on any pick up in global growth given that 70% of its market is international. |
| 11.03am GMT | 11.03am GMT |
| 11:03 | 11:03 |
| GDP: Some more charts | GDP: Some more charts |
| Britain’s economic growth was less impressive when you adjust for population changes. | Britain’s economic growth was less impressive when you adjust for population changes. |
| GDP rose by 0.5% on a per-head basis in the last quarter, and is now 1.8% above its pre-crisis peak in 2008. | GDP rose by 0.5% on a per-head basis in the last quarter, and is now 1.8% above its pre-crisis peak in 2008. |
| Overall, Britain’s economy is 8.6% larger than before the financial crisis struck - making it one of the better-performing G7 economies. | Overall, Britain’s economy is 8.6% larger than before the financial crisis struck - making it one of the better-performing G7 economies. |
| 10.42am GMT | 10.42am GMT |
| 10:42 | 10:42 |
| PwC: Britain growing steadily since Brexit vote | PwC: Britain growing steadily since Brexit vote |
| John Hawksworth, chief economist at PwC, has a good take on today’s GDP report: | John Hawksworth, chief economist at PwC, has a good take on today’s GDP report: |
| “Today’s revised GDP data were a mixed bag of good and bad news, but this doesn’t change the big picture that the UK continued to grow steadily during the six months following the Brexit vote. | “Today’s revised GDP data were a mixed bag of good and bad news, but this doesn’t change the big picture that the UK continued to grow steadily during the six months following the Brexit vote. |
| “Estimated fourth quarter GDP growth was marked up slightly from 0.6% to 0.7% due primarily to stronger estimated growth in manufacturing. This was linked also to a combination of stronger export growth on the back of a more competitive pound and a gradually strengthening world economy. | “Estimated fourth quarter GDP growth was marked up slightly from 0.6% to 0.7% due primarily to stronger estimated growth in manufacturing. This was linked also to a combination of stronger export growth on the back of a more competitive pound and a gradually strengthening world economy. |
| “Consumer spending growth also remained solid in the fourth quarter as a whole, although the latest retail sales figures suggest that this has shown signs of tailing off in December and January. | “Consumer spending growth also remained solid in the fourth quarter as a whole, although the latest retail sales figures suggest that this has shown signs of tailing off in December and January. |
| “Less positively, estimated annual GDP growth in 2016 was revised down from 2% to 1.8%, pushing the UK slightly below Germany (1.9%) in the G7 growth league, though the difference is well within the margin of error on any such early GDP estimates. | “Less positively, estimated annual GDP growth in 2016 was revised down from 2% to 1.8%, pushing the UK slightly below Germany (1.9%) in the G7 growth league, though the difference is well within the margin of error on any such early GDP estimates. |
| “The main reason for the downward revision seems to have been weaker North Sea oil and gas production during the first half of 2016; however, this is a sector-specific trend that does not really reflect the underlying strength of the UK economy. Excluding oil and gas output, estimated UK GDP growth might actually have been revised up in 2016. | “The main reason for the downward revision seems to have been weaker North Sea oil and gas production during the first half of 2016; however, this is a sector-specific trend that does not really reflect the underlying strength of the UK economy. Excluding oil and gas output, estimated UK GDP growth might actually have been revised up in 2016. |
| 10.38am GMT | 10.38am GMT |
| 10:38 | 10:38 |
| Reuters have also spotted that Britain has lost its crown as the world’s fastest growing major economy: | Reuters have also spotted that Britain has lost its crown as the world’s fastest growing major economy: |
| Britain's 2016 GDP growth revised down to 1.8% from 2.0% - now no longer fastest in G7 (Germany 1.9%) https://t.co/EH0RQY6OuN via @ReutersUK | Britain's 2016 GDP growth revised down to 1.8% from 2.0% - now no longer fastest in G7 (Germany 1.9%) https://t.co/EH0RQY6OuN via @ReutersUK |
| Headlines you will never read:"Britain actually not fastest-growing economy in western world after all." https://t.co/LPLJQFoqdN | Headlines you will never read:"Britain actually not fastest-growing economy in western world after all." https://t.co/LPLJQFoqdN |
| 10.35am GMT | 10.35am GMT |
| 10:35 | 10:35 |
| Today’s growth report shows that fears of an immediate recession if Britain voted to leave the EU were misplaced. | Today’s growth report shows that fears of an immediate recession if Britain voted to leave the EU were misplaced. |
| But...the fall in business investment is a concern, says Ian Kernohan, Economist at Royal London Asset Management: | But...the fall in business investment is a concern, says Ian Kernohan, Economist at Royal London Asset Management: |
| “Far from slowing down after the vote to leave the EU, GDP growth actually picked up in the second half of the year. However, there were some signs that Brexit uncertainty is starting to have some impact on the corporate sector, with business investment down during the last three months, combined with slower growth in consumer spending. | “Far from slowing down after the vote to leave the EU, GDP growth actually picked up in the second half of the year. However, there were some signs that Brexit uncertainty is starting to have some impact on the corporate sector, with business investment down during the last three months, combined with slower growth in consumer spending. |
| 10.33am GMT | 10.33am GMT |
| 10:33 | 10:33 |
| UK no longer fastest-growing G7 economy | UK no longer fastest-growing G7 economy |
| Britain appears to have lost its claim to be the fastest-growing major economy. | Britain appears to have lost its claim to be the fastest-growing major economy. |
| Despite the strong expansion in Q4, growth for 2016 as a whole has been revised down to 1.8%, from 2%. | Despite the strong expansion in Q4, growth for 2016 as a whole has been revised down to 1.8%, from 2%. |
| That’s slower than Germany, which grew by 1.9% last year, but still ahead of the US which only managed 1.6% growth. | That’s slower than Germany, which grew by 1.9% last year, but still ahead of the US which only managed 1.6% growth. |
| Now, all those numbers could also be revised in the future. But right now, chancellor Philip Hammond won’t be able to boast about the fastest growth in the G7 when he gives next month’s budget speech. | Now, all those numbers could also be revised in the future. But right now, chancellor Philip Hammond won’t be able to boast about the fastest growth in the G7 when he gives next month’s budget speech. |
| The UK has lost its title as the world's fastest growing advanced economy in 2016, despite a Q4 growth upgrade https://t.co/fmFQ9mtjfY pic.twitter.com/STLLWgE7Ku | The UK has lost its title as the world's fastest growing advanced economy in 2016, despite a Q4 growth upgrade https://t.co/fmFQ9mtjfY pic.twitter.com/STLLWgE7Ku |
| 10.26am GMT | 10.26am GMT |
| 10:26 | 10:26 |
| Darren Morgan, head of GDP at the ONS, has warned that consumer spending has tailed off in recent months. | Darren Morgan, head of GDP at the ONS, has warned that consumer spending has tailed off in recent months. |
| Overall, the dominant services sector continued to grow steadily, due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017. | Overall, the dominant services sector continued to grow steadily, due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017. |
| 10.19am GMT | 10.19am GMT |
| 10:19 | 10:19 |
| Sam Tombs of Pantheon Economics is concerned that Britons are spending beyond their means.... | Sam Tombs of Pantheon Economics is concerned that Britons are spending beyond their means.... |
| UK GDP breakdown shows real household spend up 0.7%, even though employees' compensation grew by just 0.1%. This is not sustainable growth | UK GDP breakdown shows real household spend up 0.7%, even though employees' compensation grew by just 0.1%. This is not sustainable growth |
| Maybe the most striking thing from GDP revisions today is detail on where growth is coming from. 2016 entirely driven by household spending | Maybe the most striking thing from GDP revisions today is detail on where growth is coming from. 2016 entirely driven by household spending |
| 10.08am GMT | 10.08am GMT |
| 10:08 | 10:08 |
| Experts react to UK GDP report | Experts react to UK GDP report |
| The City has given today’s growth report a rather muted reception. | The City has given today’s growth report a rather muted reception. |
| Jeremy Cook, chief economist at the international payments company, World First, says that last year’s growth figures are rather ancient history. | Jeremy Cook, chief economist at the international payments company, World First, says that last year’s growth figures are rather ancient history. |
| “UK GDP may have gained some momentum into the end of 2016 but recent news from UK seems to have shown that that momentum has been lost in the early weeks of 2017. | “UK GDP may have gained some momentum into the end of 2016 but recent news from UK seems to have shown that that momentum has been lost in the early weeks of 2017. |
| Services growth is set to slow, buffeted by rising inflation and slowing real wage gains and a consumer that is not waving but drowning, business investment remains poor given uncertainty over the negotiations between the UK and the EU following the Brexit vote last summer and while trade was stronger on the quarter this is purely a function of the devaluation of the pound | Services growth is set to slow, buffeted by rising inflation and slowing real wage gains and a consumer that is not waving but drowning, business investment remains poor given uncertainty over the negotiations between the UK and the EU following the Brexit vote last summer and while trade was stronger on the quarter this is purely a function of the devaluation of the pound |
| Several economists are concerned by the fall in UK business spending (or ‘gross fixed capital formation’) in the last quarter. | Several economists are concerned by the fall in UK business spending (or ‘gross fixed capital formation’) in the last quarter. |
| Duncan Weldon, head of research at Resolution Group explains why it might be a problem: | Duncan Weldon, head of research at Resolution Group explains why it might be a problem: |
| Mixed UK GDP picture: decent net trade but weak biz investment. | Mixed UK GDP picture: decent net trade but weak biz investment. |
| Weak gross fixed capital formation is kinda a problem if you want to run a capitalist economy. Just saying. It's sort of important. | Weak gross fixed capital formation is kinda a problem if you want to run a capitalist economy. Just saying. It's sort of important. |
| Jo Michell, economist lecturer at Bristol Business School, is also concerned by the 1% drop in business spending: | Jo Michell, economist lecturer at Bristol Business School, is also concerned by the 1% drop in business spending: |
| It doesn't really look like an investment-led boom, does it? https://t.co/9Z1JCZpAJX | It doesn't really look like an investment-led boom, does it? https://t.co/9Z1JCZpAJX |
| Danielle Haralambous of the Economist Intelligence Unit points out that Britain’s pharmaceuticals sector had a good quarter: | Danielle Haralambous of the Economist Intelligence Unit points out that Britain’s pharmaceuticals sector had a good quarter: |
| Revision to #UK Q4 GDP (0.7% v 0.6%) after strong Dec manufacturing output, itself the result of a surge in (volatile) pharmaceutical output | Revision to #UK Q4 GDP (0.7% v 0.6%) after strong Dec manufacturing output, itself the result of a surge in (volatile) pharmaceutical output |
| Overall, manufacturing output surged by 1.2% during the quarter. Here’s Ms Lee Hopley, chief economist at EEF, the manufacturers’ organisation: | Overall, manufacturing output surged by 1.2% during the quarter. Here’s Ms Lee Hopley, chief economist at EEF, the manufacturers’ organisation: |
| “The UK economy performed more strongly that first estimated at the end of 2016, aided by a particularly solid quarter for manufacturing growth. | “The UK economy performed more strongly that first estimated at the end of 2016, aided by a particularly solid quarter for manufacturing growth. |
| The resilience of the UK economy, particularly in the latter part of 2016 has been supported by a robust support from net trade and a rapid post-referendum recovery on consumer’s confidence to keep spending. | The resilience of the UK economy, particularly in the latter part of 2016 has been supported by a robust support from net trade and a rapid post-referendum recovery on consumer’s confidence to keep spending. |
| But... | But... |
| “The UK economy is rarely without its weak points and at the end of 2016 it was business investment. Capital expenditure by businesses saw a contraction in the final months of last year contributing the first year-on-year contraction in business investment since 2009. It’s too soon to declare this an worrying omen for 2017, especially as more recent survey indicators have been signalling a more positive trend. | “The UK economy is rarely without its weak points and at the end of 2016 it was business investment. Capital expenditure by businesses saw a contraction in the final months of last year contributing the first year-on-year contraction in business investment since 2009. It’s too soon to declare this an worrying omen for 2017, especially as more recent survey indicators have been signalling a more positive trend. |
| 9.52am GMT | 9.52am GMT |
| 09:52 | 09:52 |
| But..in a worrying signal, UK business investment fell by 1% in the last quarter. | But..in a worrying signal, UK business investment fell by 1% in the last quarter. |
| The ONS reports that there was “a slowdown within business investment” in the last three months of 2016. This was driven by subdued growth within the “ICT equipment and other machinery and equipment” assets. | The ONS reports that there was “a slowdown within business investment” in the last three months of 2016. This was driven by subdued growth within the “ICT equipment and other machinery and equipment” assets. |
| 9.46am GMT | 9.46am GMT |
| 09:46 | 09:46 |
| As this chart shows, Britain’s economy has just posted its fastest quarterly growth in a year. | As this chart shows, Britain’s economy has just posted its fastest quarterly growth in a year. |
| 9.45am GMT | 9.45am GMT |
| 09:45 | 09:45 |
| Net trade boosts UK growth | Net trade boosts UK growth |
| Today’s report shows that net trade helped to drive Britain’s economic growth in the last quarter 0f 2016. | Today’s report shows that net trade helped to drive Britain’s economic growth in the last quarter 0f 2016. |
| Net trade added 1.3 percentage points to the UK growth rate in October to December, says the ONS. That reverses a 1.2% decline in the third quarter. | Net trade added 1.3 percentage points to the UK growth rate in October to December, says the ONS. That reverses a 1.2% decline in the third quarter. |
| UK Q4 GDP growth revised up to 0.7%q/q off the back of a big contribution from net trade. Consumers chipped in too. pic.twitter.com/YG8CGnoVlb | UK Q4 GDP growth revised up to 0.7%q/q off the back of a big contribution from net trade. Consumers chipped in too. pic.twitter.com/YG8CGnoVlb |