GDP is estimated to have increased by 0.5% during the fourth quarter of 2015, with production dipping by 0.2%m according to preliminary figures from the Office for National Statistics (ONS).
Compared to the previous quarter (July to September), GDP was slightly up during October to December, 0.5% compared to 0.4%.
In contrast, production decreased by 0.2% following an increase also of 0.2% during July to September.
- “Economic hangover” to weigh on manufacturing confidence in 2016
- “Challenging conditions” continue to take toll on output
Overall, GDP was 1.9% higher in quarter 4, compared year-on-year, with GDP increasing by 2.2% in 2015 compared to 2014.
According to various official sources, UK manufacturing is facing a series of ongoing challenges, including – but not limited to – a decline in global demand, a strong pound making conditions more difficult for exporters, and a severe drop in international oil prices.
Deputy chief economics at EEF, Zach Witton commented: “While the UK economy continues to grow at a steady pace, largely driven by the consumer, the risks are mounting as global headwinds increase with little prospect of the UK’s trade performance improving anytime soon.
“The challenge for policymakers will be to ensure the right conditions for growth are established as far as possible and business is not hampered with additional costs that will make a challenging environment even more difficult.
Witton explained: “Manufacturing ended the year on a flat note, rounding off a disappointing year for the sector.
“However, the picture remains very much a sectoral story with those sectors exposed to oil and gas struggling, while those consumer facing such as automotive are faring much better on the back of a healthy labour market and strong wage growth.
“While we expect the sector to grow this year the risks are mounting. Along with the oil price remaining low, slower growth in emerging markets, especially China is likely to hamper export prospects.”
CBI director of economics, Rain Newton-Smith said: “The UK economy ended 2015 in decent health, but it’s clear that some sectors are having a tough time.
North Sea support package
The Government has announced a substantial cash “injection” into North East Scotland’s economy, with the signing of a new UK Aberdeen Region City Deal fund of up to £250m.
The fund will look to boost innovation and diversification in the oil and gas industry, supporting the industry to exploit remaining North Sea reserves and expand Aberdeen Harbour in order to facilitate decommissioning projects.
The deal also sets out how the region will diversify the biopharmaceutical and agri-food industries, alongside the area’s economy, to create new jobs and export opportunities, alongside improvements to digital connectivity.
“Manufacturers are still feeling the hit from weaker global growth and competitive pressures from abroad. And while low oil prices are a boon for the economy as a whole, businesses in the North Sea industry are suffering.
“That’s why the North Sea oil support package announced by the Prime Minister is positive, and the Government must continue to engage with industry closely to help ensure a smooth transition to lower oil prices.
“While the economy should see decent growth over 2016, global risks have ramped up noticeably – particularly with prospects for emerging markets looking weaker, bearing down on the outlook for the world economy.”
Chief economist at the British Chambers of Commerce (BCC), David Kern noted: “Given the difficult international background, it is not surprising that the UK failed to sustain the more impressive economic growth seen in 2014.
“The GDP figures demonstrate that the recovery remains fragile. While the services sector continues to grow, production is close to stagnation and the construction sector is now in recession. Every effort must be made to support both these sectors as we seek to rebalance the economy.”