GDP growth falls to 2.2% in 2015

GDP was 1.9% higher compared with the same quarter a year ago, however GDP in 2015 as a whole fell to 2.2% compared to 2.9% growth in 2014.

Output increased in 2 of the main industrial groupings within the economy in Q4 2015. Services increased by 0.7% and agriculture increased by 0.6%. In contrast, production decreased by 0.2%, while construction output decreased by 0.1%.

In Q4, GDP was estimated to have been 6.6% higher than the pre-economic downturn peak of Q1 2008.

Ben Brettell, Senior Economist at Hargreaves Lansdown, said:

"Your interpretation of today’s GDP figures will depend on whether you take a ‘glass half full’ or a ‘glass half empty’ view of the UK economy. The bigger picture is that growth remains lacklustre, but reasonably resilient. A slowdown in emerging markets combined with increased uncertainty in global financial markets was bound to weigh on growth, but the domestic economy remains in reasonable health despite these headwinds.

"Growth accelerated to 0.5% in the final quarter of 2015, up from 0.4% the previous quarter. However, the annual pace of growth slowed to its weakest in nearly three years – output in Q4 was 1.9% higher than a year previously, down from 2.1% in Q3.

"In 2015 as a whole the UK economy grew 2.2% - significantly less than the 2.9% posted in 2014. As recently as November the Office for Budget Responsibility had forecast that the UK economy would grow 2.4% in 2015, but it soon became clear that forecast would be missed. Last week’s poor retail sales - down 1% in December compared with 2014, further fuelled speculation that today’s number would disappoint.

"Weaker construction and production output are the primary reasons for the slowdown, which could prompt concerns that the UK economy’s reliance on the services sector is increasing further. Production output declined 0.2% in the fourth quarter and construction was down by 0.1%, whereas the dominant services sector grew by 0.7%.

"It’s important to remember this is only the first estimate of GDP - based on less than half of the data which will ultimately be available. Revisions to today’s figures are likely in the coming months. Looking forward, the low oil price should continue to aid the domestic consumer, but neither wage growth nor inflation look anywhere near strong enough for the Bank of England to consider higher interest rates. 2016 looks set to be another year of the ‘Goldilocks economy’."