Yahoo Finance UK Economic Growth Revised Higher For 2015
The UK economy grew more strongly than previously thought at the end of last year but the current account deficit with the rest of the world ballooned to record levels, official figures showed.
Gross domestic product (GDP) growth for the fourth quarter was revised up from 0.5% to 0.6% and annual growth from 2.2% to 2.3%, the Office for National Statistics (ONS) said.
However, official figures also pointed to a less healthy picture from other indicators of the economy including a current account deficit which widened to £32.7bn in the fourth quarter from £20.1bn in the third.
The fourth quarter figure represented 7% of GDP - the highest proportion since records began in 1955.
It (Other OTC: ITGL - news) reflects a widening gap between imports and exports and imbalance between income from UK overseas investments and foreign investments in the UK.
Howard Archer, chief UK and European economist at IHS Global Insight, said it was a "truly horrible" performance with the current account deficit "eye wateringly large".
He said: "While the markets have so far taken a relatively relaxed view of the UK's elevated current account deficits, it could become an increasing problem if the markets lose confidence in the UK economy for any reason.
"An obvious potential trigger for the markets losing confidence in the UK economy could be a vote to leave the EU."
Bank of England Governor Mark Carney has said a vote to leave the bloc would test the "kindness of strangers" on whom Britain relies to cover its balance of payments shortfall.
ONS chief economist Joe Grice said: "The latest GDP data shows the UK economy ended 2015 a little more strongly than previously thought.
"But the figures also show a fall in household incomes, with the saving ratio reaching a record low, and a record current account deficit."
Chancellor George Osborne said the upward revisions to GDP meant Britain remained "one of the fastest-growing major advanced economies".
He added: "However, the UK is not immune to risks in the global economy as slowing global growth weighs on our outlook.
"Today's figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU."
The upward revision to fourth quarter GDP was triggered by a sharply higher estimate for the construction sector as well as slightly better performances from the dominant services industries and manufacturing.
Meanwhile, real terms household disposable income fell by 0.6% in the fourth quarter after rising by 1.6% in the previous three months. However it grew by 3.3% for the year as a whole.
Household spending rose by 2.8% last year while the ratio of money households have available to save fell from 5.4% to 4.2%.
Investec (LSE: INVP.L - news) economist Chris Hare said: "We now have an even clearer picture of an unbalanced recovery, driven by household spending, borrowing from abroad, while external trade and manufacturing growth remain in the doldrums."
