NEWS

The year of 2013 has ended on a strong and positive note as the British economy grew at the strongest and fastest rate in last six years. A business survey conducted by KPMG/CBI shows that optimism of businesses in London for the next six months is at a three year high at 69% from 56% a quarter ago. The survey indicates that the optimism is driven by higher employment rates, rock bottom interest rates and falling inflation in last 4 years.

Recently, the Office for National Statistics (ONS) published data on employment which suggested a sharp fall in the unemployment rates at 7.1% from 7.4% three months ago had further fuelled optimism in the economic recovery. Capping of business rates at 2% has further boosted the confidence of businesses across the UK.

According to ONS Preliminary Estimate on GDP, the economy grew in every quarter in 2013. The services and manufacturing sectors were the drivers of that growth showing increases to 1.9% by the year end, the strongest before the financial crisis started in 2007.

As the data was published; the chancellor said, “0.7% growth in GDP is a boost for the economic security of hardworking people. Our long-term plan is delivering a brighter economic future.”

The prime minister added "The GDP figures are another sign our long-term economic plan is working – more growth means more jobs, security and opportunities for people."

Labour leader Ed Miliband has argued, however, that while growth and falling unemployment are to be welcomed, a severe cost of living crisis that is blighting millions of people in Britain has yet to be addressed.

A further research of data published by ONS showed that while the construction industry sector shrunk by 0.3% which was recently hit by shortage of construction materials, Britain’s dominant services sector grew by 0.8% in the last quarter boosting the growth in economy. British manufacturing output increased by 0.9%, with industrial production growing by 0.7%, while agricultural output improved by 0.5%.

The British economy grew at a marginally slower pace in the final quarter of 2013 compared with the third, when GDP increased by 0.8%, but it was in line with economists' expectations.

Joe Grice, chief economic adviser at the ONS, said "the economy does seem to be improving more consistently", and added: "Today's estimate suggests over four-fifths of the fall in GDP during the recession has been recovered, although it still remains 1.3% below the pre-recession peak."

These estimates of GDP do not give details on the spending side of the British economy, thus we will need to wait for the complete compilation of data before coming to the final conclusions, however the figures suggests an overall recovery of the British economy in coming years.