In response to the latest growth figures, showing the UK economy grew 0.6% from October to December 2016, maintaining the rate of growth of the previous two quarters, Michael Martins, Economist at the Institute of Directors, said:
“The UK economy finished 2016 on a strong note, underpinned by consumption-dominated sectors. The hotel and restaurant sectors grew by 1.7 and business and financial services grew by 0.9, the former likely benefitting from the fall in sterling and increase in the number of tourists from abroad. Other sectors where long-term investment and capital-intensity are major concerns, like construction and manufacturing, saw slower growth of 0.1 and 0.3, respectively, given the uncertainty surrounding the UK’s future relationship with the EU and the rest of the world.
“As inflation increases and begins to eat into disposable income, consumption levels tend to naturally decrease or personal debt levels increase. The result is likely to be a slowing of growth in the short to medium term. That said, 58 per cent of IoD members expected their revenues to increase throughout 2017, and 60 per cent were optimistic about their firm’s prospects, both positive indicators of economic confidence as the UK begins the process of exiting the EU.”