Fourth-quarter growth of 0.7% is boost for George Osborne – although GDP remains below pre-recession peak

This article is more than 6 years old

This article is more than 6 years old

The British economy grew at the strongest rate in six years in 2013, having ended the year on a strong note as the recovery became more entrenched.

The UK’s services and manufacturing sectors were the drivers of 0.7% growth in the fourth quarter, taking the annual growth rate to 1.9%, the strongest since 2007 before the financial crisis took hold.

The economy grew in every quarter last year according to the Office for National Statistics, providing a significant boost for the chancellor who has persistently argued that a burgeoning recovery is proof that his economic plan is working.

Shortly after the figures were published Osborne 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 echoed the message: “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.

Average wages of 0.9% are still less than half the rate of inflation, which was 2% in December.

The economy grew at a slightly slower pace in the final quarter of the year compared with the third, when gross domestic product 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”, but GDP is still well below pre-crisis levels.

Grice 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.”

UK GDP by sector. Graphic: ONS

A breakdown of the data showed a mixed picture, with Britain’s dominant services sector expanding by 0.8% between October and December, while the construction sector shrank by 0.3%. Construction has been hit recently by a shortage of bricks, which has been a drag on the sector’s recovery.

British manufacturing increased by 0.9%, with industrial production overall up by 0.7%, while agricultural output increased by 0.5%.

The first estimate of GDP from the ONS is based on less than half the data used to produce the final estimate, and gives no detail on the spending side of the economy.