Britain’s economy grew in 2014 at the fastest annual pace since before the financial crisis, despite a fourth-quarter slowdown, official data showed Tuesday in a pre-election boost to the government.
Gross domestic product — the value of all the goods and services produced in the economy — expanded by 2.6 percent, the best annual figure since 2007, the Office for National Statistics (ONS) said in a statement.
Economists said the data was welcome news for the Conservative-Liberal Democrat coalition government, which faces an election in 100 days’ time in May.
The economy’s 2014 performance marked an acceleration from 1.7-percent growth in 2013 and was in line with expectations, but undershot the government’s official forecast for expansion of 3.0 percent.
The announcement bolstered expectations that Britain was likely to have been the world’s fastest growing major economy in last year.
– Election campaign focus –
British Prime Minister David Cameron’s Conservatives have placed the economy at the heart of their election campaign.
GDP is now 3.4 percent higher than its pre-recession peak at the start of 2008, according to the ONS.
On a gloomier note, it added that output rose just 0.5 percent in the October-December period compared with the previous three months, aided by a strong services industry.
That was the weakest quarterly rate in a year, as activity was weighed down by a construction sector which shrank at the fastest pace for more than two years.
And the figure marked a slowdown from the 0.7 percent GDP growth seen in the third quarter.
“Today’s figures confirm that the recovery is on track and our plan is protecting Britain from the economic storm, with the fastest growth of any major economy in 2014,” said Chancellor of the Exchequer George Osborne.
“But the international climate is getting worse, and with 100 days to go until the election now is not the time to abandon that plan and return Britain to economic chaos.”
The Q4 growth rate was the lowest level since the same period of 2013, when it stood at 0.4 percent. Market expectations had been for 0.6-percent growth.
Output was dented by construction, which contracted by 1.8 percent — the biggest drop since the second quarter of 2012.
– Buoyant services sector –
“This is the second consecutive quarter in which the growth rate has fallen but it is too early to say if there is a general slowing-down of the economy,” said ONS chief economist Joe Grice.
“The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic.”
The government was also boosted last week by official data showing that British unemployment has hit another six-year low and wages are climbing in real terms.
The resurgent economy meanwhile faces the prospect of record-low borrowing costs for the time being, after the Bank of England revealed last week that policymakers voted unanimously in January for the first time since July to hold interest rates at a record-low 0.50 percent.
Weaker-than-expected fouth-quarter GDP could push back the timing of any interest rate rise, economists said.
“Slightly softer than expected GDP growth … in the fourth quarter will likely fuel expectations that the Bank of England will most likely to hold off from raining interest rates until 2016,” said Howard Archer at IHS Global Insight.