By Jason Douglas and Jon Sindreu
LONDON--The U.K. economy slowed more than expected in the final
quarter of 2014 as construction activity slipped and tumbling oil
prices hit North Sea oil and gas production.
The U.K.'s Office for National Statistics said Tuesday the
economy grew by 0.5% in the final quarter of 2014, an annualized
rate of 2.0%. Growth for the year as a whole was 2.6%, the ONS
said, the British economy's best annual performance since 2007.
But the quarterly growth rate was weaker than economists were
expecting. Economists polled by The Wall Street Journal had
predicted growth of 0.6% on the quarter.
The ONS said industrial production shrank 0.1% on the quarter on
falling oil output, while construction-sector activity plunged
1.8%. Growth was fueled by the services sector, which accounts for
roughly 80% of annual output. Services-sector output rose 0.8% on
the quarter.
Joe Grice, ONS chief economist, said that although the economy's
growth rate has fallen in the U.K. for the past two quarters it is
"too early to say" whether the U.K. is experiencing a more
widespread slowdown.
Further signs the economy is slowing could be awkward for Prime
Minister David Cameron and Treasury chief George Osborne, whose
stewardship of the economy is expected to be a central issue in a
general election in May. Pollsters say the vote is one of the
hardest to call in years.
The International Monetary Fund forecasts the U.K. will be the
second fastest-growing advanced economy in 2015 after the U.S.,
buoyed by tumbling oil prices and a hoped-for revival in the
neighboring eurozone, a major market for British goods and
services. The European Central Bank this month unveiled a huge
program of asset purchases to stimulate the currency union's
moribund economy.
Write to Jason Douglas at jason.douglas@wsj.com and Jon Sindreu
at jon.sindreu@wsj.com