Solid Q4 GDP data hold potential for real growth in 2018

Commenting on this morning’s official figures on UK GDP growth for the final three months of 2017, PwC chief economist John Hawksworth said:


"The economy moved up a gear in the fourth quarter of 2017, with quarterly GDP growth picking up to 0.5% from 0.4% in the previous quarter taking the average growth in the first half of 2017 to just 0.3%.


"This slight acceleration in Q4 reflected solid growth of 0.6% in the services sector, led by business services and finance. Manufacturing also had a strong quarter, rising by 1.3% on the back of a strengthening global and Eurozone economy, which has boosted UK exports.


"However, these areas of strength were offset to a degree by a third consecutive quarter of declining construction output. Construction seems to be the sector most affected by Brexit-related uncertainty deterring commercial property investment and dampening the housing market, particularly in London.


“There was also a negative but temporary downward drag on Q4 growth from the closure of the Forties oil pipeline in December.


"Today's growth figures, together with the stronger than expected jobs data on Wednesday and the strength of the world economy, mean that the UK economy is starting 2018 on a stronger footing than seemed likely six months ago.


“If this momentum can be sustained, then UK growth this year could exceed the 1.5% rate that the IMF projected earlier this week, but this would also raise the likelihood of one or more interest rate rises later this year."



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John Compton
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