GDP up by 0.4% in fourth quarter of last year

(c) Sky News 2018: <a href="">GDP up by 0.4% in fourth quarter of last year</a>

The UK economy grew by 0.4% during the fourth quarter of last year, according to the Office for National Statistics

The result was weaker than the expected 0.5% and was blamed on a slowdown in consumption and business investment.

Household spending grew by 1.8% between 2016 and 2017, its slowest rate of annual growth since 2012, in part reflecting the increased prices faced by consumers.

In year on year terms, downwardly revised growth of 1.4% was the weakest in more than five years.

Among the figures was a 0.6% growth in services: between the third and fourth quarters, transport, storage and communication grew by 1.1%, business services and finance were up by 0.9% and government and other services increased by 0.2%.

On the other hand, distribution, hotels and restaurants decreased by 0.2%.

There was no growth in business investment, which remained at £46bn in the fourth quarter. But, compared to the same quarter in 2016, it grew by 2.1%.

Construction output was estimated to have decreased by 0.7% in the fourth quarter and agriculture, which makes up the smallest proportion of of total output, decreased by 0.9%.

The ONS also revised its 2017 growth estimate down 0.1% to 1.7%, confirming the British economy cooled off somewhat in the year after Britons voted to leave the European Union.

This compares to the EU economy growing by 0.6% in the fourth quarter, the 19th consecutive quarter that the 28 country-bloc showed positive growth.

The G7 countries (Canada, France, Germany, Italy, Japan, the UK and the US) saw economic growth of 0.5% during the same period.

Chris Williamson, chief business economist at IHS Markit (Stuttgart: A1139A - news) , said: "Survey evidence indicates that investment and construction are being subdued by heightened business uncertainty, generally linked to Brexit, while consumer spending is being hit by high inflation.

"The depreciation of sterling meanwhile showed few signs of benefiting the economy in terms of trade, with exports in fact acting as a drag on the economy in the fourth quarter.

"However, manufacturing continued to expand at a solid pace in the fourth quarter, as did business and financial services and transport and communications, helping drive the upturn in GDP.

"The worry is that, with the exception of financial services, survey data hint at these sectors also losing steam in January."

Pablo Shah, economist at the Centre for Economics and Business Research said he expects the UK economy to "expand by 1.6% in 2018, as domestic uncertainty looks set to persist and monetary conditions tighten both in the UK and across the world".