UK 2014 GDP registers fastest growth in seven years

Last year, the UK economy grew at its fastest pace since 2007, recording a GDP growth of 2.6 per cent.

In 2014 the UK’s economy grew by 2.6 per cent, the largest expansion since 2007 and faster than the 1.7 per cent growth in 2013, according to official figures. The positive figure gave cause for government officials to reiterate that the economic recovery was “on track” due to a dominant service sector.

Data from the Office for National Statistics (ONS) showed that last year the economy grew at its fastest pace since before the financial crisis, despite a loss of momentum in the final quarter of 2014. The service sector continues to boom but the construction sector shrank a little and the manufacturing sector slowed.

The services sector grew by 0.8 per cent in Q4, the construction sector contracted by 1.8 per cent and manufacturing languished at 0.1 per cent.

Slowdown came from erratic sectors

However, this deceleration in Q4 of 2014 is no surprise given that the global economic environment is worsening and demand for goods is decreasing. Furthermore, some of the negative readings came from industries that are known for their volatility, which should assuage some economist’s fears that the UK economy is coming into a period of slow growth.

"The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic," said Joe Grice, chief economist at the ONS.

Latest reading has potential to be revised higher

But the slight negative tone of this report could even be revised higher in coming months, according to economists at the Centre for Economics and Business Research (CEBR).

"[We] wouldn't be surprised if the ONS figures are revised up over time, painting a stronger picture for economic performance at the end of the year,” the CEBR said in a report.

They continued to explain that the contraction in the construction sector was surprising due to other indicators and surveys indicating an overall healthier picture, which suggests that the UK economy will continue to go from strength to strength.