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UK economic growth solid but heavily dependent on consumer spending


UK economic growth solid but heavily dependent on consumer spending



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People going shopping remained one of the biggest factors in the growth of Britain’s economy at the end of last year.

The economic recovery is relying heavily on services companies and household demand amid a sharp fall in business investment and a drag from declining exports.

Consumer spending rose 0.7 percent between October and December helped by near-zero inflation and steady, though unspectacular, wage growth for British workers.

“Once again, the buoyancy of the services sector has offset the relative sluggishness of the rest of the UK economy,” ONS chief economist Joe Grice said.

The Office for National Statistics said GDP was up 0.5 percent in the fourth quarter, and for 2015 as a whole Britain’s economy grew 2.2 percent.

The ONS data showed business investment fell at the sharpest pace in nearly two years, down 2.1 percent in quarterly terms. The decline was blamed on disposals in the transport equipment sector.

Net trade also dragged on growth, subtracting 0.4 percentage points from economic growth on the quarter.

Bank of England policymakers are sensitive to any signs of domestic demand slipping as the global economy weakens. Uncertainty around Britain’s June 23 referendum on European Union membership is another confidence issue.


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