LONDON – The British economy grew at its fastest rate in six years during 2013, the latest in a string of indicators showing that the recovery is gaining momentum.
Following 0.7 per cent quarterly rise in the final three months of the year, the British economy has now grown for four straight quarters, figures from Office for National Statistics showed Tuesday. All the sectors assessed, excluding construction, posted gains, with services doing best with a 0.8 per cent rise.
As a result, the British economy grew by 1.9 per cent in 2013. That was the best rate since 2007’s 3.4 per cent growth and marks Britain out as one of the best-performing advanced economies. Still, unlike, say the United States and Germany, the British economy remains smaller than it was in 2008 when the global financial crisis really bared its teeth and prompted the country’s deepest recession since World War II.
“The economy does seem to be improving more consistently,” the statistics office’s chief economic adviser Joe Grice said. “Today’s estimate suggests over four-fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3 per cent below the pre-recession peak.”
Despite the relatively upbeat figures, a number of economists expressed caution, citing structural imbalances that will become more evident over time. Last week, Bank of England Governor Mark Carney also warned of substantial amount of “spare” capacity, with the British economy around 20 per cent smaller than it otherwise would have been had the crisis and the recession not happened.
“In the near-term, unbalanced growth is better than no growth, but if the recovery is to be sustained over the medium-term growth will need to broaden,” said RBS chief economist Ross Walker. “We are cautious about the scope for export-led growth this year, given the anemic pace of expansion across the euro area as a whole and sterling’s grind higher, but more optimistic about the scope of the relatively cash-rich corporate sector to step up its capital expenditure.”