Fastest economic growth since 2007 The UK saw its fastest economic growth since 2007, as in Q4 2014 the economy grew by 0.5%, according to the latest figures from the Office for National Statistics (ONS). Although Q4 saw a slow down from the 0.7% recorded in Q3, the ONS reported the country’s Gross Domestic Product (GDP) grew by 2.6%, on an annual basis, which was up from the 1.7% reported in 2013. Explaining this quarterly slow-down the ONS’s Chief Economist, Joe Grice, was quoted as saying it is “too early to say” if this slowdown would continue in the short term. He went on to add: “The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic.” In more detail, the services sector saw growth of 0.8% in Q4, whilst the construction industry recorded a reduction in output of 1.8%. It was this latter figure that damaged the overall outcome and did come as something of a surprise to many of the economic pundits who follow these figures closely. At the same time, the manufacturing sector was flat, showing only marginal growth of 0.1%, which was its worst economic performance since early 2013. Energy supply also recorded a fall of 2.8%, given the dramatic fall in the price of oil experienced over the last three months. Both construction and energy are renowned for being volatile sectors, however. Despite the above caveats, the UK economy is amongst the best-performing of all the world’s major economies in 2014 and this is endorsed by the International Monetary Fund, (IMF) who have independently forecast UK economic growth of 2.7% in 2015. Some other analysts have been even more bullish, with Samuel Tombs, of Capital Economics, stating; “With the recent halving of oil prices providing a timely boost to households’ discretionary spending power, credit still becoming cheaper and pay growth on an improving trend…the best days of the UK’s recovery may still lie ahead.”
Markets (January) (Data supplied by the Outsourced Marketing Department) January saw continuing volatility in the markets, as the success of the hard left-wing Syriza party (whose manifesto included negotiating national debt forgiveness and bringing an end to austerity) in the Greek elections threw up fresh fears for the stability of the Euro currency and consequential fiscal and political unrest. Here in the UK the FTSE100 had a roller-coaster ride, losing 3.1% at one stage to 6,366.5, but recovering later in the month to close up 2.79% at 6,749.4. The wider FTSE250 also gained 5.2%, to finish January at 16,305.77. AIM, the junior market, did not fare so well, losing 1.66% to 690.34. Surprisingly, given the political unrest, the Eurostoxx50 put on an impressive 6.23% to 3,342.48, whilst the Japanese Nikkei225 continued its bull run to 17,674.39, recording a monthly gain of 1.28% and 12.8% over the past three months. Despite encouraging economic data across the pond the US markets saw overall declines. The Dow Jones lost 3.69% to end on 17,164.95 and the technology-based Nasdaq dipped to 4,635.24 for a 2.13% loss on the month. The currency markets were still dominated by the across-the-board strengthening of the US Dollar. It rose to $1.51 against Sterling, a gain of 3.2% and to $1.13 against the Euro, a gain of 6.6%, mainly as a direct result of the Greek elections and fears for the stability of the Euro currency. UK Sterling also improved strongly against the Euro, rising by 3.8% to €1.34. Oil continued to fall dramatically in price, with the benchmark Brent Crude price falling a further $4 in January alone to $52.99 a barrel. This represents a fall of over 7% for the month and 38% over the past three months. Gold, the usual safe haven in times of unrest, saw demand as it closed January at $1,273.24 an ounce for a rise of 6.19% since the end of 2014. Download full report here

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