UK economy grows at fastest rate since 2007

The UK economy grew by 0.7% in the fourth quarter of 2013, bringing the annual growth rate to 1.9%, according to the Office for National Statistics (ONS). The ONS said that this was the UK's fastest annual rate of growth since 2007.

This was also a fourth consecutive quarter of expansion, last seen in 2010.  

However, growth in the fourth quarter was down slightly, from 0.8% to 0.7%, due to a 0.3pc decline in the construction sector. Elsewhere manufacturing grew by 0.9pc whilst the services sector expanded 0.8pc and is now above 2008 levels.

Last week, the International Monetary Fund (IMF) upgraded its UK forecast by the biggest margin of any economy, expecting the UK to grow by 2.4pc in 2014. Along with the sharp drop in unemployment to 7.1% and inflation dropping to 2.0%, these are encouraging signs.

However, some economists feel that the recovery is over-reliant on consumer spending and needs a significant increase in real wages, investment and export growth to make it truly sustainable.

This pick up in the economy was reflected by investor confidence and activity, as data from the Investment Management Association (IMA) shows that Individual investors in the UK returned to equities in 2013.

Money in investment funds totalled £770bn in 2013, up 16% from £662bn a year earlier. Retail investors contributed £20.4bn of new money into these funds during 2013, up from £14.3bn in 2012. According to the IMA, the amount of new money going into equity funds was at its highest level since 2000.

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