LONDON: British business investment fell at its sharpest rate in nearly six years late last year, after tumbling global oil prices hit the North Sea petroleum industry, but stronger exports helped make economic growth a bit more balanced.
Gross domestic product between October and December grew by a quarterly 0.5 percent, data showed, confirming a preliminary reading. That was the slowest growth rate in a year, although there have been signs the economy started 2015 more strongly.
Economists said the second consecutive quarterly fall in business investment raised questions about the recovery.
The 1.4 percent drop in business investment was the biggest since mid-2009. Economists had expected it to rise slightly.
"Business investment needs to revive for the upturn to be truly sustainable," said Chris Williamson, an economist with data firm Markit. "At the moment, the growth outlook appears to be largely reliant on households benefiting from falling prices and higher wages, the latter being far from guaranteed."
The slowdown in overall growth at the end of last year has not prevented Prime Minister David Cameron from putting the economy front and centre in the campaigning by his Conservative Party ahead of national elections on May 7.
Britain's economic growth of 2.6 percent in 2014 as a whole was the fastest in seven years.
In yearly terms, fourth-quarter growth was confirmed at 2.7 percent by the Office for National Statistics on Thursday.
The ONS said the fall in business investment appeared linked to the halving of global oil prices since June last year.
British finance minister George Osborne has said he might provide tax breaks to help companies operating in the North Sea.
An industry group said this week that North Sea investment could nearly halve between 2014 and 2016.
Economists say business investment might also be hit by uncertainty over the outcome of the national elections in May.
The Bank of England forecasts that Britain's economy will grow by 2.9 percent this year - its fastest growth in nearly a decade – as the plunge in oil prices puts more money in the pockets of consumers and businesses.
Yet growth in household spending, which accounts for almost two thirds of Britain's economic expenditure, slowed to 0.5 percent in the October-December period.
The dominant services industry remained the economy's big driver, rising 0.8 percent in the fourth quarter and 3.3 percent in yearly terms, its strongest year-on-year growth since 2007.
Net trade contributed 0.6 percentage points to the economy's quarterly growth rate, a rare encouraging sign for Britain's attempts to rely less on domestic demand.
But Simon Wells, an HSBC economist, said a 3 percent rise in the value of sterling so far this year could hurt exports, and the lower fuel prices might spur consumers to buy more imports.
Britain's economy was 3.4 percent bigger than its previous peak before the financial crisis and about 8 percent bigger than at the time of the last election in May 2010.
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