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British economic growth accelerates in quarter to end of Jan.: NIESR

Xinhua, February 11, 2017 Adjust font size:

British economy grew at a faster pace over the three months to the end of January than in the previous three month period, according to figures Friday released by a major think-tank based in London.

The National Institute for Economic and Social Research (NIESR) said that the British economy grew by 0.7 percent over the quarter to the end of January, an increase of 0.1 percentage point over the three months to December and stronger still than the 0.5 percent increase over the three months to the end of November.

According to NIESR, the economy grew 0.6 percent in the fourth quarter of 2016, giving an annual growth rate of 2 percent.

The resilience of the UK economy since the Brexit referendum in June has largely been supported by robust expansion in real consumer spending, NIESR said.

"Compared to previous forecasts, this represents something of a pick-up in growth. The story that we had in previous months of robust consumer spending remains," report author Oriol Carreras told Xinhua.

"Detail we have from retail sales is pretty strong. So it seems that consumers are still spending a lot," Carreras, a NIESR research fellow, said.

The recent acceleration in the rate of growth from somewhere around long-term trend at 0.5 percent over three months to 0.7 percent has been driven by much-improved manufacturing figures.

"What is surprising is that data from the manufacturing side of the economy has also been pretty strong, compared to previous ones. There is a bit of a pick-up in growth that will probably carry over into the few months ahead," Carreras said.

"The growth in manufacturing seems to be linked to the pharmaceutical sector, and we do not know how much to read into that."

The prospects for 2017 are good, with the strong consumer spending of last year carrying over into the first month of this year.

NIESR forecast that rising inflation will push consumer price inflation sharply upwards from its current 1.6 percent (the latest figures, from December), already sharply increased from November's 1.2 percent.

CPI is forecast to reach 3.3 percent this year, dropping only slightly to 2.9 percent in 2018.

This is largely due to upward pressures from the sharp fall in sterling against other currencies in the aftermath of the Brexit vote.

The resulting rise in import costs and the weaker value of the pound in consumers' pockets are expected to reduce the rate of growth and NIESR forecasts 2017 growth at 1.7 percent. Enditem