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Britain’s economy has grown by 0.6% in the fourth quarter of last year against predictions that thought in the wake of Brexit complexities it would shrink.

This is the third quarter in a row that the economy has grown which has made economic predictions look farcical.

The growth comes in the form of the jobs market and the PMI survey showed that manufacturing has seen an increase too.

The services sector in Britain was strong too jumping to a 17 month high in December.  The services sector comprises of 80% of Britain’s GDP.  Official figures for GDP in the third quarter last year have also been revised upwards, making economist predictions of a drastic slowdown following the Brexit vote even more inaccurate.

Retail Sales Fall

There are signs, however, that consumer spending is falling.  During the Christmas period, retail sales fell 1.9% while in November they dropped by 0.1%.  As a result, the Bank of England has pencilled in growth of 0.4% for the first quarter of January 2017 and held interest rates at 0.25% amid concerns in a fall in a business investment.

Bank of England Climb Down

Mark Carney, the Bank of England governor admitted at the Treasury Select committee a few weeks ago that Brexit was no longer the biggest risk to financial stability.  He did warn of inflation dangers, however, after the Consumer Price Index (CPI) jumped to a two and a half year high at 1.6%.  As sterling loses value CPI is expected to increase.

The target for CPI is 2% but the Bank believes this will rise to 3%.

Mark Carney went on to say that the bank will look at household debt which is increasing as consumers continue to spend despite inflation which will apply pressure to household finances.

Economists, failure to predict growth following the Brexit vote has been described as their “Ian McCaskill moment.”  The late weather forecaster failed to predict the severity of an incoming hurricane.

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