GDP growth: the UK economy isn't doing as well as we thought it was

It turns out the Office for National Statistics was over-zealous on the growth forecasting front. We grew by 1.7% at the end of last year, not the 1.9% it originally thought.

by Emma Haslett
Last Updated: 31 Mar 2014

Good old Office for National Statistics: it turns out, amid all the to-do over recovery, it got a little over-excited. This morning it published figures showing growth during the final quarter of 2013 was 1.7%, rather than the 1.9% it had originally thought.

That’s understandable – GDP predictions do, after all, require a certain amount of crystal ball gazing and it’s not often the ONS is completely spot on. Although it does suggest recovery isn’t quite as robust as we’d hoped for. Or, as writer John Niven put it this morning:

The services sector was the ‘strongest contributor’ to growth: it grew by 0.8% during the quarter, meaning it reported growth during every quarter of 2013. Manufacturing activity also rose by 0.5%, but – despite all the Chancellor’s help (to buy) – construction contracted by 0.2%.

What was worrying, though, was the UK’s current account deficit (how much the value of the goods and services the UK imports exceeds the value of its exports. It differs from the trade deficit in that it also includes interest, dividends, transfers etc). Although it dropped to £22.4bn in the final quarter of 2013, from a record-breaking £22.8bn in the third quarter, it’s still way above the £14bn economists had expected.

According to the ONS, the deficit was driven by a fall in investment from abroad. Any hopes Obama had of encouraging David Cameron to tighten restrictions on Russian zillionaires are about to go out of the window…

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