Whilst keeping track of the various micro-economies which make up the broader economic picture of the UK can send you looking for the paracetamol, there are always a few things we look to for a broader picture. Here in the UK, that means looking to a couple of main metrics; the service industry and the manufacturing industry. In 2015, it was the former that saw strength whilst the latter suffered under tough global conditions. The really important indicator though is the overall growth rates for the economy, as we leave the first month of 2016 behind, we’ve finally got a clear picture of 2015.
In the final quarter of 2015 the UK economy grew by 0.5%, according to the Office for National Statistics, which represented an increase of 0.1% over Q3. It’s a welcome improvement – one likely inspired by the run up to Christmas.
That number means that the annual growth for the UK in 2015 was 2.2%. Whilst certainly nowhere near as worrying as the negative or flat growth we’ve witnessed in in the past. It’s also down on the rate of growth witnessed in 2014, which hit 2.9%.
All in all, it’s in line with the recent forecast from the International Monetary Fund, which said that the UK’s economy would grow by 2.2% in 2015, as well as for the next two years. The IMF also suggested that truly robust growth would not return until the instability seen around the globe, especially in those Eastern markets which have struggled of late.
Another potential drag on the UK economy is the uncertainty surrounding a so-called ‘Brexit, as European firms are nervous to engage in large, long term contracts with British companies in case the UK leaves the common market. Though it has to be said that the manufacturing industry has seen a boost in the first month of 2016 thanks to stronger than expected domestic demand for British product.
On the numbers, George Osborne said: "These GDP numbers show the British economy continues to grow steadily and despite turbulence in the world economy Britain is pushing ahead." However, there can be little doubt that the recovery is still heavily weighted towards the services sector in the south.
That’s bad news for Mr Osborne, because his plan for a ‘Northern Powerhouse’ seems to be failing to win over small businesses in the North. Research from the Federation of Small Businesses (FSB) highlighted that only 50% of small businesses backed the proposals. Indeed, although the vast majority claimed to know of the plans, a fifth of those businesses were not sure what it meant in practice. If Mr. Osborne truly wants to unite the North as an economic counterbalance to London, there’s clearly much more work to be done. "Small businesses are the lifeblood of the economy and their support is crucial to help build the Northern Powerhouse," said Mr. Osborne, but words are proving cheap for those businesses in the North which aren’t getting the support they demand.