UK economy beats forecasts

The UK economy has beaten forecasts, growing at a rate of 0.6 per cent in the fourth quarter of 2016, above the 0.5 per cent figure estimated. This was mainly driven by strong consumer spending and expansion of the services sector, but the manufacturing sector also grew strongly and reversed much of the contraction of the third quarter. Industrial production was unchanged from the previous quarter. Overall, the figures show strength and resilience of the UK economy, which was in fact the fastest growing economy in the G7 last year, despite the political headwinds. However, it is important to note that much of this increase in consumer spending was debt driven and with the anticipation of interest rises and inflation in the future, demand for credit could slow and consumer spending may weaken. The pound sold off on the report over concerns that UK growth is being propped up entirely by services.