The British economy improved by 0.7% in the final quarter of 2013, taking the total GDP growth for the year to a resounding 1.9%, said the Office for National Statistics.
The announcement completes a remarkable turnaround of events over the course of 2013, with initial forecasts for annual growth well below the figure revealed by the ONS today.
And they have said that although growth was down 0.1% on the quarter before, that nevertheless GDP was growing at its quickest rate in over six years.
“We’ve seen growth in most parts of the economy,” said Joe Grice, chief economist at the ONS.
However, the ONS have said that despite the positive figures, that the economyís growth is still well off its pre-recession value of 3.4%, and that it would likely be a few more years before this is matched again.
Business confidence levels rise
The final quarter of 2013 saw Britainís service sector flourish, with output increasing by 0.8%, though industrial productivity decreased from 0.8% to 0.7% which took the total growth down to 0.7%.
The construction industry also displayed a poor final quarter with growth falling by 0.3%, despite recent initiatives by the government to bolster the property market.
John Longworth, director general of the British Chambers of Commerce, said: “These growth figures confirm what
we’ve been hearing for some time.
“Businesses across Britain are growing ever more bullish about their prospects. Our surveys now consistently show
business confidence levels not seen for decades.”
The Office for Budget Responsibility has currently predicted that the UK economy will grow to 2.4% this year, though this may be changed over the course of the year as was the case in 2013.
ING Bank’s James Knightley said: “Employment continues to rise robustly, housing activity is very firm, confidence is on the rise, credit growth is improving and the UK’s key export market – the eurozone – is showing some encouraging signs.
“Consequently, we believe that the economy can post GDP growth of 3% this year.”
It is worth remembering that all predictions given are based on the current trajectory of the economy, so it is likely that the final growth at the end of 2014 could be substantially higher or lower than estimated at present.
Long way to go
The spectacular performance in the GDP growth during 2013 has led many leading economists to call for a premature rise in interest rates, though the Bank of England have remained hinged on their stance.
Previously, Bank Governor Mark Carney had said he would consider a rise after unemployment fell below 7%, and although this threshold is set to be breached by spring this year, he has said that he would not implement a rise until that time that wages caught up with the economy.
The governor has set new targets of improving growth and living standards before bring rates up, and pointed to the fact that the economy is still 1.3% worse off in GDP than it was before the recession occurred.
Furthermore, concerns will be raised by the fact that service sector seemed to carry the UKís growth in the final quarter, with the poor performance in the construction and industrial industry suggesting that an imbalanced recovery is taking place at the moment.
Nevertheless, the reality is that Britain has one of the fastest growing economies in the western world, and if the government can improve the condition of small businesses across the UK, then the quality of employment people are entering into will subsequently improve and productivity will rise immeasurably.