Manufacturing drives GDP rise of 0.7% in last three months of 2016

The UK's gross domestic product (GDP) grew by 0.7% in the final three months of last year, up from an initial estimate of 0.6%.

The figures from the Office for National Statistics showed that the increase was driven by a boost to manufacturing, which rose 1.2% over the period, and by a 0.8% rise in the services industry.

This marks the 16th consecutive quarter of growth for that sector of the economy.

GDP is an important indicator of the overall health of the economy and the statistics underline the UK's robust response to the country's vote to leave the European Union in June - which had been expected to provide a bigger economic shock.

But while the news was good for short-term growth, GDP levels for the whole of 2016 were revised down 0.2% to 1.8%.

This is a slight slowdown from the 2.2% registered in 2015, and the second year in a row that the pace of expansion has weakened.

It also means that Britain has lost its title of the fastest growing economy among the G7 countries.

Business investment fell over the three month period to December 2016, dropping 1% to £43.5bn, meaning the overall rate for the year declined by 1.5%.

This is equal to a £2.7bn loss for the economy and is the first annual decrease in company expenditure since 2009.

Shilen Shah, a bond strategist at Investec Wealth & Investment, said: "Somewhat disappointingly, business investment fell on the quarter, with hints that Brexit uncertainty is hitting business confidence.

"Looking forward, a slowdown in consumer spending is likely in 2017 as higher inflation hits consumers in the wallet.

"A slowdown in GDP growth in 2017 therefore currently looks inevitable."