THE UK is likely to have been the world's fastest growing major economy last year, latest figures have revealed, but there are growing fears the recovery has stalled in industries such as manufacturing.

The economy grew by 2.6 per cent in 2014, however the pace of expansion slowed more sharply than expected in the last three months of the year.

The annual figure is the best since before the recession. But gross domestic product (GDP) rose by just 0.5 per cent in the final quarter of 2014, the weakest level in a year, weighed down by a construction sector which shrunk at its worst pace for more than two years.

The growth figure for 2014 was widely expected, though falls short of the 3 per cent forecast last month by the independent Office for Budget Responsibility (OBR).

It beats 2013's figure of 1.7 per cent and matches the 2.6 per cent recorded in 2007.

Industry leaders and analysts were mixed over whether the loss of momentum in the final quarter might be temporary or prolonged.

Ian Malcolm, managing director of Redcar car parts manufacturer, ElringKlinger (Great Britain), said the prospects for his company were good, but in terms of the wider economy he warned: "It's not time to be rolling out the flag and blowing the trumpets just yet. There is too much that can go wrong, and while the GDP figure might look rosy, when you dig deeper you see industries such as manufacturing struggling."

He noted that problems in the Eurozone, uncertainty about the UK's long-term ties with the EU, and the rising cost of UK exports, as factors which could stifle an upturn in 2015.

George Osborne said the figures showed the economy was "on track." He warned that the international economic climate was "getting worse", and so the government must continue with its economic strategy.

But TUC General Secretary Frances O’Grady thought the recovery was taking too long to boost wages and job security.

She said: “This is the slowest recovery in modern history. George Osborne has already failed to meet the OBR's modest forecast for the economy last year, and today's figures show growth slowing down even more.

“With most people locked out of the recovery it's no wonder that the economy is failing to do better. Families are set to be worse off in 2015 than they were five years ago. A recovery based on low wages and job insecurity is bad for working people, bad for the public finances and bad for growth.”

James Knightley of ING Bank said: "This is the eighth consecutive quarterly expansion, but is disappointing, hinting at a loss of momentum.

"The details show that the long heralded rebalancing story in the UK has completely stalled."

ONS chief economist Joe Grice believed it was too early to say if there is a general slowing-down of the economy, adding:

"The dominant services sector remains buoyant while the contraction has taken place in industries like construction, mining and energy supply, which can be erratic."

James Knightley of Global Economics said the loss of momentum during the quarter was “disappointing” and that the long-heralded rebalancing story in the UK “has completely stalled”.

Shadow chancellor Ed Balls said the slowdown in fourth-quarter growth was a concern, and that "Tory claims that the economy is fixed will ring hollow with working people" whose "wages are down by £1,600 a year since 2010."