UK economy lags with a year to go to Brexit – MarketWatch


LONDON–The U.K. looks set to be the slowest-growing economy among its peers as it enters the final year of its membership of the European Union on Thursday, with uncertainty over its future ties to the bloc expected to prevent the economy from reaping the full benefits of a synchronized global upswing.

Figures published Thursday by the Office for National Statistics confirmed the U.K. economy expanded 1.4% in the final quarter of 2017 compared with the same period a year earlier, the weakest expansion among the Group of Seven advanced economies.

The U.S. expanded a revised 2.9%, the Commerce Department said Wednesday. In Europe, the British expansion was easily outpaced by France, Germany and Italy, marking a reversal from previous years, which saw the U.K. race ahead as the region’s common currency area struggled to escape from a debt crisis.

Forecasts for 2018 put the U.K. once again near the bottom of the G7 table. The Organization for Economic Cooperation and Development predicts growth of just 1.2% through 2018 as a whole, the same pace it expects for Japan. The U.S. and other advanced economies are forecast to expand much faster as the global economy moves in lockstep after a long spell of patchy growth.

Data Thursday showed consumer spending eased off a little in 2017 as household budgets were squeezed by meager wage growth and high inflation, which exceeded 3% late last year as a sharp fall in the pound pushed up prices. Consumers turned to debt to support spending. The proportion of total income saved by households sank to 4.9% in 2017, its lowest level since records began 1963, the ONS said.

Net trade–which represents exports minus imports–made its largest contribution to full-year growth since 2011, the statistics agency said.

That helped narrow the country’s current-account deficit with the rest of the world to 4.1% of annual national income in 2017, according to the figures, the smallest gap since 2011.

Write to Jason Douglas at Jason.Douglas@wsj.com and Wiktor Szary at Wiktor.Szary@wsj.com



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