UK GDP grows more than initially estimated in Q4

The UK economy grew at a faster pace than initially estimated in the fourth quarter of last year, according to data released on Thursday by the Office for National Statistics.

GDP rose by 1.3% compared to the previous quarter, up from an initial estimate of 1% growth and from revised 0.9% growth in the third quarter. That left the economy just 0.1% below where it was before the pandemic.

The largest contributors to the increase were human health and social work activities, driven by increased GP visits at the start of the quarter, and a large jump in Covid testing and tracing activities, as well as the extension of the vaccination programme.

Annual GDP growth was revised a touch for both 2020 and 2021. It is now estimated to have increased by 7.4% in 2021 versus 7.5% previously, following a revised 9.3% decline in 2020, versus 9.4% previously.

Meanwhile, consumer spending growth was revised down to 0.5% quarter-on-quarter from 1.2%.

Paul Dales, chief UK economist at Capital Economics, said the upward revision to GDP growth in Q4 may not be as encouraging as it looks as a lot of it appears to be due to inventories while consumer spending was revised down.

"The latter suggests the squeeze on real incomes is starting to bite, although the fall in the saving rate is providing a cushion," he said.