LONDON--The U.K. economy slowed more than expected in the final quarter of 2014 as construction activity slipped and tumbling oil prices hit North Sea oil and gas production.
The U.K.'s Office for National Statistics said Tuesday the economy grew by 0.5% in the final quarter of 2014, an annualized rate of 2.0%. Growth for the year as a whole was 2.6%, the ONS said, the British economy's best annual performance since 2007.
But the quarterly growth rate was weaker than economists were expecting. Economists polled by The Wall Street Journal had predicted growth of 0.6% on the quarter.
The ONS said industrial production shrank 0.1% on the quarter on falling oil output, while construction-sector activity plunged 1.8%. Growth was fueled by the services sector, which accounts for roughly 80% of annual output. Services-sector output rose 0.8% on the quarter.
Joe Grice, ONS chief economist, said that although the economy's growth rate has fallen in the U.K. for the past two quarters it is "too early to say" whether the U.K. is experiencing a more widespread slowdown.
Further signs the economy is slowing could be awkward for Prime Minister David Cameron and Treasury chief George Osborne, whose stewardship of the economy is expected to be a central issue in a general election in May. Pollsters say the vote is one of the hardest to call in years.
The International Monetary Fund forecasts the U.K. will be the second fastest-growing advanced economy in 2015 after the U.S., buoyed by tumbling oil prices and a hoped-for revival in the neighboring eurozone, a major market for British goods and services. The European Central Bank this month unveiled a huge program of asset purchases to stimulate the currency union's moribund economy.
Write to Jason Douglas at jason.douglas@wsj.com and Jon Sindreu at jon.sindreu@wsj.com
(END) Dow Jones Newswires
January 27, 2015 04:38 ET (09:38 GMT)
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