The economic growth of Britain tends to move at a slower pace compared to the fourth quarter last year. This led the UK behind other major economies despite its preparation for Brexit. The Office for National Statistics (ONS) revised lower its estimate for the UK growth by 0.4% against the initial forecast of 0.5% excluding some missing forecasts from experts, which could keep the rate unchanged. According to reports, the UK production came in lower than the first assessment, as consumers spend lesser due to the surge in prices brought by the sharp decline in the British pound after the Brexit referendum. As 2017 ended with a weaker performance, the overall economic growth dropped from 1.8% to 1.7%, which is the weakest in five years. While the global recovery rate improves, the United Kingdom was left behind by other major countries. The GDP of France grew by 1.9%, German economy expanded by 2.2% last year and the American economy ramped up to 2.3%. ONS’ statistician Darren Morgan said that some of the slight changes in energy production, mining and services caused the modest downward revision to the overall quarterly growth. Morgan added that the service sector continues to gain traction until the end of 2017, however, there are few consumer-facing industries that weakened and led to a price increase and squeezing household budgets. The aftermath of financial industry deregulation shows that the UK mainly depends on consumer expenditure for growth, but its latest figures indicate unwillingness of British consumers to spend considering the budget squeezed due to real pay decline and the inflation grew higher than wages. Moreover, household spending rose to 0.3% in Q4 and 1.8% overall in 2017, hence, the slowest rate recorded annually since 2012. Also, businesses seem cautious in spending money because firm investment remained flat during the last quarter of 2017. The unexpected increase in unemployment data from October to December issued by the ONS triggered the downward revision to growth. The sluggish data give rise to the possible dilemma for the Bank of England, as policymakers provided hints about the potential rate hike in May. Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that the latest GDP figures show that the economy continues to have a weak condition, but does not necessary for another rate increase to be relieved.
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