UK loses 'fastest growing economy in G7' title despite fourth quarter growth
Britain's economy picked up speed in the final three months of last year, but a downward annual revision has lost the UK its title as the fastest growing country in the G7.
The Office for National Statistics (ONS) said gross domestic product (GDP) expanded by 0.7% in its second estimate of fourth quarter growth, which is up 0.1 percentage points from initial readings of 0.6%.
Economists had been expecting no revision.
However, annual growth for 2016 has been revised down by 0.2% to 1.8%, marking a slight slowdown from 2.2% in 2015.
It puts the UK behind Germany which recorded a 1.9% rise in annual GDP, and means the UK is no longer the fastest growing economy among G7 members, which includes the US, Canada and Japan.
The pound lost ground following the news, to trade 0.35% lower against the US dollar at 1.242.
Versus the euro, sterling was flat at 1.183.
ONS head of GDP Darren Morgan said: "The economy grew slightly more in the last three months of 2016 than previously thought, mainly due to a stronger performance from manufacturing.
"Overall, the dominant services sector continued to grow steadily, due in part to continued growth in consumer spending, although retail showed some signs of weakness in the last couple of months of 2016, which has continued into January 2017."
The fourth quarter increase was driven by a 1.2% rise in manufacturing output, and supported by a 0.8% increase in the service industry, marking its 16th consecutive quarter of growth.
Household spending grew by 0.7% in the final quarter - higher than the 0.6% average for quarter-on-quarter growth seen since the start of 2013 - helped by a 1.2% rise in retail sales.
But business investment fell 1% to £43.5 billion between October and December, due to weak spending on information and communication technologies, buildings and structures excluding homes, and other machinery and equipment.
It means business investment dropped 1.5% between 2015 and 2016, equal to £2.7 billion, and is the first annual decrease since 2009.
Experts have predicted that jitters following the EU referendum would lead to a drop in corporate expenditure.
Shilen Shah, a bond strategist at Investec Wealth & Investment, said: "Somewhat disappointingly, business investment fell on the quarter, with hints that Brexit uncertainty is hitting business confidence.
"Looking forward, a slowdown in consumer spending is likely in 2017 as higher inflation hits consumers in the wallet. A slowdown in GDP growth in 2017 therefore currently looks inevitable."