Economic growth predictions revised higher in UK
Final figures for 2014 show the UK’s economy expanded faster than initially estimated.
Figures showing activity for the last quarter expanded at 0.6 per cent instead of 0.5 per cent, according to the Office for National Statistics (ONS).
Furthermore, the unexpected revision also increased growth for the whole year, which rose from 2.6 per cent to 2.8 per cent - the highest annual growth rate since 2006.
These new figures suggest that current forecasts for growth this year might need revisions too.
Strong performance reports
"Given the outlook for consumer spending, the Office for Budgetary Responsibility's forecast of 2.5 per cent for 2015 looks a touch pessimistic, and could come under some upward pressure in the coming months," explained Ben Brettell, senior economist at Hargreaves Lansdown.
The ONS cited a strong performance of exports as the main driver behind the upwards revision, while consumers also helped lift growth in the UK. Exports rose by 4.6 per cent, the largest increase since 2013, and household spending grew by 0.6 per cent.
According to Robert Peston, the BBC’s economics editor, economic performance in the UK is “definitely improving”.
“GDP or national income per capita is 4.8% above where it was at the election,” Mr Peston said. He also noted that household consumption per head is three per cent higher than levels seen mid-2010. However, this suggests the recovery still depends heavily on consumer spending for growth.
Increase in real household disposable income
Despite this, the recent “economic well-being” report from the ONS notes that the living standards in Britain have returned to levels that we last saw at the time of the previous election.
Real household disposable income per head (the official measure of living standards) was 0.19 per cent higher at the end of last year than it was at the end of May 2010.
This will be welcome news for the Conservatives ahead of the coming general election, providing evidence that their long-term economic plan is working.