UK GDP growth confirmed at 0.7% as business investment rises

A Nissan employee works on the second generation Qashqai, at the Nissan plant in Sunderland

Increased business investment helped to lift growth in the final three months of 2013, official figures have shown.

The Office for National Statistics (ONS) confirmed that the economy grew by 0.7% in the quarter, unchanged from its previous estimate.

However, its estimate for growth in 2013 as a whole was cut to 1.8% from the initial reading of 1.9%.

The ONS said business investment in the fourth quarter rose 2.4% from the previous three-month period.

Business investment was also up 8.5% from a year earlier.

Other factors helping growth in the final quarter of 2013 included a 0.4% rise in household spending and a similar contribution from net trade, as the balance between imports and exports improved.

Recent business surveys have suggested that the recent upturn in the UK economy has continued into 2014.

'More to do'

David Kern, chief economist at the British Chambers of Commerce, said the latest ONS figures were "positive news" and would underpin business confidence.

But he added it was now "important to improve the quality of Britain's recovery".

"While it is encouraging that consumer spending is growing, we need to rely more on investment and net exports. These figures show a small move in the right direction, but there is still more to do."

Neil Prothero, deputy chief economist at manufacturers' organisation EEF, said the "key question" for 2014 was whether companies were feeling confident to translate "investment intentions to concrete action".

"Next month's Budget must send out a powerful signal that government will continue to act on delivering a competitive business environment that will give the private sector confidence to invest," he added.

'Painful period'

The recent recovery in the economy has raised the question of when the Bank of England will raise rates from their current historic low of 0.5%.

Recent comments from Bank of England policymakers have indicated that rates will rise in the first half of 2015.

David Miles, member of the Bank of England's Monetary Policy Committee (MPC), told the BBC on Wednesday that interest rates would not rise in the next few months, adding the MPC was "not in a hurry" put rates up.

He said: "It may be that sometime next year might be the right time [to raise interest rates]. It is difficult to predict in advance."

The rise would be very gradual, when it did occur, he said.

After the recent experience of falling real wages, Mr Miles said that as the economy continued to recover, wages would rise faster than inflation.

"It has been an extraordinary period, an extremely painful period, which has lasted five years, with people's incomes falling," he said.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Business Live

  1.  
    08:28: Newspaper review
    paper

    The FT reports that Russian billionaire Mikhail Fridman will fight to buy those North Sea gas assets. The Wall Street Journal analyses the complex relationship between mobile operators and social networks and whether they should defriend each other. The Times takes a look at more companies coming forward to tackle RBS's Global Restructuring Group (GRG) and its alleged habit of putting them to the wall. RBS says a legal inquiry found no evidence it "set out to artificially distress otherwise viable businesses", The Times reports.

     
  2.  
    08:13: Watch out
    watch

    Technology fans will be watching the Mobile World Congress, which kicks off in Barcelona today, for the latest gadgets. Manufacturers seem determined to get us to buy a smartwatch. Apple and its rivals such as Samsung are trying to make the things prettier and more useful, AFP reports, having interviewed various analysts. Will you be tempted?

     
  3.  
    07:59: Trinity Mirror
    Mirror.co.uk

    Trinity Mirror will start paying a dividend for the first time since 2008 - of 3p a share - as pre-tax profits rose 1% to £102.3m for 2014, the Daily Mirror publisher said. However, print advertising revenue fell 14.1% in the second half of the year as supermarkets cut their spending.

     
  4.  
    07:45: Thorntons
    choc

    A "mixed performance" from Thorntons, chief executive Jonathan Hart tells investors. International sales rose by 19.9% to £5.4m in the first half of the company's financial year, but UK commercial sales melted away by 12.4% to £54.7m. Sounds more like a pick 'n' mixed bag to us...

     
  5.  
    07:32: Nationwide house prices
    For sale sign

    House prices fell by 0.1% in February, according to Nationwide - the first decline in five months, since September. That brought the annual rate of price rises to 5.7% compared with 6.8% in January - a sharper than expected slowdown.

     
  6.  
    07:16: Lib Dems Norman Smith Assistant political editor, BBC News
    Lib Dems

    The Liberal Democrats announce the first of many proposed tax rises today as part of their vow to pay off the deficit by 2018 by increasing the tax take rather than cutting spending further. Norman Smith tells Radio 4's Today programme that banks would have all the cuts in corporation tax since 2010 wiped out in a move that would generate about £1bn for the public purse. However, the Lib Dems still need to raise a further £7bn or so to make their sums add up, he adds.

     
  7.  
    07:02: Buffett letter
    bricks

    A quick reminder of what Mr Buffett's company owns. Among other businesses, Berkshire Hathaway owns about half of Heinz, engine oil firm Lubrizol, clothing maker Fruit of the Loom, the pleasingly named Acme Brick company and private plane operator NetJets. He also owns stakes in Mars, Coca Cola and American Express.

     
  8.  
    06:50: Bank shares BBC Radio 4

    David Cumming, head of equities at Standard Life, tells presenter Simon Jack on Today there is a "lot of noise" around banking stocks given the regulatory pressure the sector is now under, meaning they have a "higher than average risk profile". He also thinks the FTSE 100 will crack the 7,000 mark in the next few weeks as the economy continues to improve.

     
  9.  
    06:37: East Coast trains Radio 5 live
    train

    The East Coast rail route between London and Scotland has returned to private hands after more than five years in the public sector. David Horne of Virgin Trains East Coast is on 5 live. He says Virgin has done a good job with the West Coast line. National Express took over the line during a recession, so starting a franchise now should work better for Virgin, Horne adds.

     
  10.  
    06:24: Market update

    China's decision to cut interest rates over the weekend - the second reduction in four months - in a bid to ward off deflation has boosted stock markets in Asia today, with Sydney up 0.5% as mining companies bounced higher, while the Nikkei in Tokyo and the Shanghai Composite were both 0.3% higher.

     
  11.  
    06:11: Buffett letter Radio 5 live
    warren

    Sue Noffke, fund manager at asset manager Schroders, is 5 live's markets guest. Billionaire investor Warren Buffett sent his annual letter to shareholders on Saturday, summing up his 50 years building one of the planet's biggest companies. Because he behaves more like an owner than an investor, "he has had a longer-term investment horizon" than other investors, says Ms Noffke.

     
  12.  
    06:02: Software security Radio 5 live

    Online security firm AVG's chief executive Gary Kovacs is on 5 live speaking from Barcelona's Mobile World Congress tech show about security breaches. The internet has "only been around for 20 years," so securing the place is now a priority, he says. A podcast is now on the website.

     
  13.  
    06:01: Chris Johnston Business reporter

    Good morning! Get in touch via email bizlivepage@bbc.co.uk or on Twitter @BBCBusiness

     
  14.  
    06:00: Howard Mustoe Business reporter

    Good morning everyone. Welcome to Monday. The UK government has said it will block the sale of 12 North Sea oil and gas fields to Russian billionaire Mikhail Fridman after concerns about the effect of "possible future sanctions". Stay tuned for more of the best business news.

     

Features

  • A very clever little girlBrain gain

    Why are people getting better at intelligence tests?


  • BeefaloBeefalo hunt

    The hybrid animal causing havoc in the Grand Canyon


  • A British Rail signBringing back BR

    Would it be realistic to renationalise the railways?


  • Banksy image of girl letting go of heart-shaped balloonFrom the heart

    Fergal Keane on the relationship between love and politics


Try our new site and tell us what you think. Learn more
Take me there

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.