Figures show good prospects for British economy in 2014: economists

Figures issued Tuesday to show Britain's gross domestic product (GDP) growth at 0.7 percent for the fourth quarter 2013 confirm good prospects for the economy in 2014, according to economists.


Statistics from the Office for National Statistics (ONS) said the British economy expanded 0.7 percent in the fourth quarter last year, down 0.1 percent over growth in quarter 3, and slightly below the expectations of many economists for 0.8 percent growth.

All four quarters in 2013 showed growth with GDP expansion over the year rated at 1.9 percent, the highest since 2007.

"It's good news. We have now had four successive quarters of economic growth, which suggests the recovery is becoming entrenched," said Martin Beck, Britain economist with Capital Economics.

The number was a bit weaker in Q4 compared to Q3, but within that services and industrial output grew quite strongly.

"The disappointment was in construction, which fell a bit, but that followed a big expansion in Q3, so not something to worry about too much," Beck said.

Beck said the recovery was becoming more balanced, with services output growing 0.8 percent quarter on quarter, but there was also quite a strong increase in manufacturing output and in industrial output as a whole.

"It is a good starting point for 2014, and we are predicting growth for this year to be about 3 percent," Beck added, saying the rate of expansion in Q4 2013 is expected to continue through 2014.

Blerina Uruci of Barclays Economics Research said the pace of growth in the economy slowed slightly in Q4, although this is still consistent with significant momentum behind the recovery.

Uruci said the level of output remained 1.3 percent below its peak in Q1 2008, following a deep recession and a very shallow recovery compared with other developed nations.

"We think the performance of the economy in levels matters significantly to the MPC (Monetary Policy Committee) and for this reason a few consecutive quarters of strong growth are unlikely to lead to an imminent Bank Rate increase," she said.

This was despite the recent sharp fall of the unemployment rate to 7.1 percent, close to the 7.0 percent threshold of the Bank of England (BOE)'s Forward Guidance policy at which it would review raising the Bank Rate from its current historical low of 0.5 percent.

Uruci said she predicted the BOE's MPC to start raising the Bank Rate in the second quarter of 2015.