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GDP growth beats forecast but depends on consumers

Consumers - The recovery remains dominated by consumer spending - SantanderCB

The size of the UK economy grew by more than expected in the final three months of last year, though the recovery remains dominated by consumer spending. GDP for the quarter was revised up from an initial estimate of 0.5% to 0.6% by the Office for National Statistics. The revision made the pound rise by as much as 0.5% against the dollar, ending the day at $1.4390, and pushed up growth for last year to 2.3%, up 0.1 percentage points from the previous estimate. Growth between the fourth quarter of 2014 and the final three months of last year was also revised upwards, by 0.2 percentage points, to 2.1%. Household spending remained the primary driver behind the change. Expenditure rose by 0.6% in the fourth quarter, unchanged from the previous three months. However, real household disposable income fell by 0.6% between the third and fourth quarters of last year, while the savings ratio dipped to 3.8%, the lowest quarterly reading since records began in 1963. Kay Daniel Neufeld, an economist at the Centre for Economics and Business Research, warned: 'The disproportionate reliance of the UK economy on household consumption could start to cause problems.'

 

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