UK gross domestic product rose faster than initially forecast in the fourth quarter, a sign the economy was progressing briskly amid regional volatility and declining energy prices.
UK GDP rose 0.6% in the fourth quarter, up from a previous estimate of 0.5%, the Office for National Statistics reported on Tuesday. GDP had also expanded by 0.6% in the third quarter.
Compared to the fourth quarter of 2013, UK GDP advanced 3%, well above the median estimate calling for 2.7%. It was also faster than the third quarter’s annual growth rate of 2.8%.
Tuesday’s figures also confirmed that UK GDP advanced 2.8% in all of 2014, rather than the previous estimate of 2.6%. The economy is now 3.7% bigger than its pre-recession peak in early 2008.
Net trade contributed just 0.9 percentage point to GDP in the final quarter of last year. Consumer spending added 0.4 percentage point, as real incomes grew 1.4%, thanks to higher wages and cheaper fuel costs. Business investment dragged on GDP in the fourth quarter, falling 0.9%, official data showed.
Despite the revision, the Bank of England is unlikely to expedite its first rate adjustment since 2009. Observers suggest interest rates will remain at a record low of 0.5% until the first quarter of next year. The Monetary Policy Committee – the BOE’s rate-setting body – has voted unanimously to keep interest rates unchanged in each of the last three meetings. MPC members Ian McCafferty and Martin Weale had previously voted in favour of raising interest rates.
UK chancellor George Osborne hailed Tuesday’s figures as a “hat-trick of good news,” referring to GDP, consumer confidence and real disposable income.
Osborn said: “We’ve had a significant upgrade to GDP, the highest consumer confidence for over 12 years and confirmation that living standards are higher than they were at the last election. This is good news for families and businesses across the country.”
The health of the UK economy is a key battle ground for rival parties vying for control of parliament in the upcoming May election. David Cameron officially kicked off the campaign on Monday by visiting Buckingham Palace to dissolve the government. The election is shaping up to be the tightest in decades, as healthcare, living standards and the broader economy are expected to take the spotlight.