Britain’s economic recovery slowed in the fourth quarter of 2014, but annual growth was the fastest since the financial crisis of 2007.
Growth of 0.5% between October and December was slower than third-quarter growth of 0.7%, and disappointed City forecasters, who had been expecting 0.6%.
With just 100 days until the general election, evidence of a slowdown will come as blow to Chancellor George Osborne.
However, Osborne insisted the “recovery is on track and is protecting Britain from the economic storm”.
The Office for National Statistics chief economist Joe Grice said it was “too early to say” if the slowdown evident in the fourth quarter would persist.
Annual growth of 2.6% was the strongest in seven years, before the financial crisis gripped the UK economy. But the slowest quarterly growth for a year knocked the pound, which weakened against the dollar and against the euro.
Growth in the fourth quarter was reliant on the UK’s dominant services sector, where output grew by 0.8%. In a blow to Osborne’s ambitions to rebalance the economy away from a heavy reliance on consumer spending, construction output shrank by 1.8% and production fell by 0.1%.
Grice said: “The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic,” he said.
James Knightley of Global Economics said that although this was the eighth consecutive quarterly expansion, the loss of momentum during the quarter was “disappointing” and that the long-heralded rebalancing story in the UK “has completely stalled”.
