UK GDP Grew By 1.9% In 2013

Growth Was Better Than Expected And Experts Believe This Will Continue In 2014

28.01.2014

Fergal Dowling, Partner | +44 (0)121 214 5476

The UK economy grew by 0.7 per cent in the fourth quarter of 2013 - resulting in a total growth rate of 1.9 per cent for the year.

In a statement released to the media, the Office for National Statistics (ONS) said this was the fastest rate of growth seen in the nation since 2007.

Most of the economic recovery was driven by the service sector, which saw a substantial rise in 2013.

However, there were areas that did not benefit from as much investment last year. Construction, which makes up around eight per cent of the UK's total economy, fell by 0.3 per cent on the quarter.

Despite this good news, the ONS has cautioned against unguarded optimism and said the economy is still not worth as much as it was in 2008 before the recession and will need to grow more to match the UK's pre-crash performance.

John Longworth, director general of the British Chambers of Commerce, told the BBC: "These growth figures confirm what we've been hearing for some time.

"Businesses across Britain are growing ever more bullish about their prospects. Our surveys now consistently show business confidence levels not seen for decades."

Despite this good news, critics of the government claim this growth is unsustainable and has been fuelled by short-term economic measures like Help to Buy, which offers Britons interest-free loans to help them afford a mortgage.

While Labour has criticised this policy, perhaps the most high-profile opponent has been business secretary Vince Cable, who is a member of the coalition's cabinet.

Mr Cable is thought to believe the measure will inflate the housing market and cause a bubble similar to the one seen in the US before the sub-prime mortgage crisis.

Deputy prime minister Nick Clegg, however, was bullish about the state of the UK's recovery.

He told the BBC: "Our economy is moving in the right direction, but we must finish the job fairly, with further investment in jobs outside London and by cutting taxes for working people."

Expert Opinion
These figures are very positive news and demonstrate that the economy is moving in the right direction, something that businesses of all sizes have suspected in recent months. This is all very good news for small businesses, as favourable economic conditions will create more opportunities for growth and potential expansion.

"However, there remain some issues which smaller firms need to bear in mind. For instance, research has suggested that access to finance remains a key problem for growing businesses but hopefully as the economy improves, more potential will emerge in this regard. We would also urge small firms to consider various government initiatives and whether such platforms could prove the right fit for them.

"Finally, we would urge smaller firms to not jump into ambitious new plans without seeking the right advice beforehand. This may include legal support on issues including employment law policies, data protection issues or advice on corporate deal queries."
Fergal Dowling, Partner