British economy picked up at end of 2017

Jan. 29, 2018 – The British economy picked up some speed at the end of 2017, which was otherwise a year that saw it slow amid uncertainties over Brexit.

The Office for National Statistics said Friday that the economy grew by 0.5 per cent in the fourth quarter compared with the previous three-month period. That’s slightly above the 0.4 per cent expected on average by economists and a pickup from 0.4 per cent in the third quarter.

The services sector grew, though the statistics office noted it continued to show a longer-term weakening. Manufacturing also improved, though construction weakened.

During the year as a whole, the economy grew 1.8 per cent, down only slightly from the previous year’s 1.9 per cent.

Analysts note that Britain’s economy has been buoyed by a global economic upturn, particularly in the neighbouring eurozone, a bloc of 19 EU countries that share the euro.

Britain is preparing to negotiate a new relationship with the European Union and there are questions over what access it will retain to the bloc, its biggest trade partner. The sides could agree on a transition deal to make the shift easier, particularly for the services sector. Amid the uncertainty, consumer spending and some investment have weakened.

Jake Trask, a research director at payments company OFX in London, noted that the data show how reliant the British economy is on services, and how that will be a pressure point in the Brexit talks.

“Given that the service sector represents around 80 per cent of the U.K. economy, a positive outcome from upcoming Brexit negotiations regarding transition and trade will be crucial,” he said.