UK GDP as a whole was up by 2.6 percent in 2014 compared with 2013 according to preliminary estimates reports the Office for National Statistics (ONS).

Comparing the last quarter of 2014 with Q4 2013 GDP was up by 2.7 percent and comparing it with Q3 2014 GDP increased by 0.5 percent, a slight drop on the increase of 0.7 percent seen in Q3 over Q2.

In Q4 2014 the services sector GDP increased by 0.8 percent and went up by 1.3 percent in agriculture. But construction saw a dip of 1.8 percent and production slipped by 0.1 percent.

The 2014 Q4 GDP was estimated to have been 3.4 percent higher than the pre-economic downturn peak in 2008 Q1 the ONS continued.

GDP to Q4 2014 graphClick the graph to enlarge it

Martin Beck, senior economic advisor to the EY ITEM Club, comments:

“The preliminary estimate for Q4 GDP shows quarterly growth running at the slowest pace in a year. However, growth of 2.6% for 2014 as a whole should still deliver the UK a narrow victory in the G7 growth rankings, placing it just ahead of Canada.

“The Q4 reading was surprisingly weak. Despite the decline in construction output, recent business surveys have pointed to a strong performance in other sectors, while the very strong retail sales hinted at a much firmer outturn for services output.

“As ever with the preliminary estimate, it is likely that the Q4 data will tell a very different story in six months or a year’s time. The national accounts data have been prone to upward revisions lately and we would be very surprised if this was not the case this time around. There is a good chance that the outturn for 2014 as a whole will eventually settle at around 3%.

“Even if we take today’s data at face value, there is little cause for concern. The collapse in the oil price over the past few months is unambiguously good news for the UK economy, with inflation set to move into negative territory and consumers enjoying a substantial boost to their spending power. This will give the economy renewed momentum and we continue to expect growth of around 3% this year.”

Azad Zangana, Senior European Economist, Schroders said.

"The initial estimate for UK GDP growth shows the economy slowed to 0.5% in the fourth quarter of 2014, compared to 0.7% growth in the previous quarter. This is slightly softer than consensus estimates of 0.6% growth, but remains robust by historical standards. For 2014 as a whole, the UK economy grew by 2.6% – the fastest annual rate of growth since 2007 and the start of the global financial crisis.

"Within the details of the latest GDP report, all of the growth in the fourth quarter came from services, while the production and construction sectors contracted. When UK oil and gas is stripped out from GDP, the economy grew at the same pace which suggests that the negative impact from the fall in oil prices has yet to register in the economic data. Moreover on the upside, the strong retail sales data published last week suggests stronger growth than currently being reported in the GDP figures. Of course, these are only preliminary estimates and may be revised up as well as down.

"Looking ahead, we forecast the economy to accelerate in the first half of 2015 thanks to the increase in households’ disposable income from the fall in fuel prices and cuts in household energy bills. We expect households to spend most of these savings, which will boost the volume of retail sales. Meanwhile, with inflation likely to turn negative in the coming months, there seems to be little appetite within the Bank of England to raise interest rates in the near-term. However, Governor Mark Carney has warned that the Bank has the ability to look through short-term moves in inflation, and so may yet consider raising interest rates by the end of the year."

Helal Miah, investment research analyst at The Share Centre, commented:

“The first estimates of the Q4 GDP numbers came in slightly below expectations at 0.5% and markedly slower than the previous three quarters of 2014. The primary driver of the reduced growth rate was the construction sector, which saw output fall by 1.8%. However, the slowdown was not enough to prevent the fastest full year growth rate of 2.7% since the financial crisis.

“Despite numbers being slightly weaker than expected, we believe the UK economy remains relatively robust. After a fantastic few years in the construction sector it is quite natural to see a return to normal markets conditions. The services element of the UK economy remains healthy and the full benefits of the plunge in the price of oil are still to come. Low inflation will hold back interest rate rises and we therefore believe that for investors the equity market remains the asset class of choice.”

Rain Newton-Smith, CBI Director for Economics, said:

“The UK economy is still advancing at a steady pace, having sustained strong growth since the beginning of 2013.

“Today’s figures confirm that growth slowed slightly compared with the previous quarter. Service sector growth remains robust, but manufacturing continues to struggle with weaker export orders, and construction output has fallen in the last three months.

“The UK should benefit from the fillip that quantitative easing will provide to the Eurozone. However, this needs to go hand-in-hand with structural reforms, like making France's labour market more flexible and greater infrastructure investment in Germany.”

TUC General Secretary Frances O’Grady said:

“This is the slowest recovery in modern history. George Osborne has already failed to meet the OBR's modest forecast for the economy last year, and today's figures show growth slowing down even more.

“With most people locked out of the recovery it's no wonder that the economy is failing to do better. Families are set to be worse off in 2015 than they were five years ago. A recovery based on low wages and job insecurity is bad for working people, bad for the public finances and bad for growth.”

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