The U.K. economy expanded at a slightly faster pace as estimated at the end of 2015 on consumer spending, while global slowdown weighed on exports and investment.
Gross domestic product grew 0.5 percent sequentially, unrevised from the preliminary estimate, data published by the Office for National Statistics showed Thursday. Growth was slightly faster than the 0.4 percent expansion seen in the third quarter.
On a yearly basis, GDP expanded 1.9 percent in the fourth quarter, unrevised from the estimate issued on January 28.
In 2015, growth moderated to 2.2 percent from 2.9 percent in 2014.
The UK recovery is still looking solid, but unspectacular, Vicky Redwood, chief UK economist at Capital Economics, said.
Looking ahead, the UK clearly faces some tough challenges in the months ahead, including weaker global sentiment, the EU referendum and more fiscal austerity, she noted.
Were the UK to vote to leave the EU in the June 23 referendum, IHS Global Insight Economist Howard Archer said he would substantially revise down GDP growth forecasts for the second half of 2016 and for 2017.
Archer does not believe the economy is weak enough to warrant an interest rate cut, especially given record high employment.
The expenditure-side breakdown of GDP showed that household and government expenditure were the major contributors to the sequential growth in the fourth quarter.
Increasing for the 10th consecutive quarter, household spending gained 0.7 percent in the fourth quarter. Government spending climbed at a slightly slower pace of 0.5 percent, following a 0.6 percent increase.
Meanwhile, gross fixed capital formation fell 0.1 percent. Business investment decreased 2.1 percent, the biggest fall in almost two years.
Exports also fell 0.1 percent, while imports climbed 1.2 percent. Consequently, the trade balance deficit widened to GBP 16.6 billion from GBP 14.7 billion in third quarter.
Including the alignment adjustment, the level of inventories increased by GBP 3.6 billion, following a rise of GBP 1.7 billion in the third quarter.
On the production side, the dominant service sector grew 0.7 percent as initially estimated.
On the other hand, production fell 0.5 percent instead of 0.2 percent. Likewise, construction output slid 0.4 percent, which was revised from the previous estimate of 0.1 percent fall.
In December, the index of services grew 2.1 percent from a year ago, another report from the ONS showed. All the main components of the services industries increased in December. Services output advanced 2.5 percent in 2015 after rising 3.3 percent in previous year.
In the fourth quarter, business investment expanded 2.4 percent year-on-year. In 2015, investment climbed 4.7 percent.
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