STRONG growth in Britain’s dominant services sector boosted UK economic growth at the end of 2017.

GDP was 0.5 per cent higher in the fourth quarter than in the third, according to the Office for National Statistics’ first estimate of UK growth in the three months to end December.

This was better than expected and the highest rate of quarterly growth since the end of 2016.

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However, for 2017 as a whole, the ONS estimated that economic growth was around 1.8 per cent - the slowest pace of annual growth since 2012. Growth in 2016 was 1.9 per cent.

The ONS said there had been a weakening of “domestic consumer facing” services industries, such as retail and hospitality, compared to 2016.

Consumers have been under pressure over the last year as prices have risen faster than wages.

ONS head of GDP, Darren Morgan, said: “Despite a slight uptick in the latest quarter, the underlying picture is of slower and uneven growth across the economy.”

The Government borrowed significantly less than expected in December.

Public sector net borrowing fell to £2.6bn, compared to analysts’ expectations of £5bn.

The reduction was helped by a £1.2bn credit from the EU after changes to its budget.

Unemployment remained steady at a record low of 4.3 per cent in the three months to November, while the number of people in work increased 102,000 to 32.21 million - a new high.

Meanwhile, average weekly earnings were 2.5 per cent higher than a year ago, including bonuses, and 2.4 per cent higher excluding bonuses.

This compares with 2.5 per cent and 2.3 per cent, respectively, during the previous three-month period.

However, with inflation at three per cent, wages continue to lose value in real terms.

The ONS said real earnings fell by 0.2 per cent over the past year, including bonuses, and by 0.5 per cent excluding bonuses.

UK manufacturing performed stronger than expected in the last quarter of 2017, according to the Confederation of British Industry (CBI).

Its industrial trends survey showed the total orders balance at +14, above forecasts of +12.

Output, and domestic and export orders all rose in the final quarter of last year, with 40 per cent of businesses reporting a rise in new orders against 17 per cent reporting a decrease.

However, some analysts expressed caution.

“Order books are surging, but producers’ expectations for growth in output over the next three months are only modestly above their long-run average,” said Pantheon Macroeconomics.

“All told, manufacturers are doing well, but they continue to lag their peers overseas, ensuring that the UK remains one of the worst performing advanced economies this year.”

UK retailers are having a tough start to 2018, according to another CBI survey.

Retailers reported weaker-than-expected sales in January, with fewer saying sales were ahead of the same period in 2017 than previous research in December.

Economists said the research appears to confirm views that 2018 will be weaker than 2017.

More Britons are buying cheap pub meals and beer, which has been good news for Wetherspoons, with the chain increasing its profits outlook. Like-for-like growth in the 12 weeks to 21 January increased by six per cent and total sales were up 4.3 per cent.

As a result, the pub operator said underlying profit before tax in its financial year to date would be “slightly” ahead of its expectations.

However, the group cautioned: “Similar outperformance in the second half will be more difficult to achieve.”

Chairman Tim Martin added: “We face significant costs in the second half in areas which include labour, business rates and the sugar tax.

"There will also be some uncertainty as to the effects on our business of the FIFA World Cup.”