United Kingdom rate in unemployment rises for first time in two years

Unemployment rises at sharpest rate for nearly five years

It helped to offset a dismal update from the construction industry, with output falling by 0.7 per cent across the fourth quarter. In midday trading, the pound was 0.5 percent lower at $1.3921.

Chris Williamson at IHS Markit said: "The economy grew less than previously thought in the final three months of 2017, and a further slowdown looks likely at the start of 2018".

United Kingdom headline unemployment increased from 4.3% to 4.4% between October and December 2017.

Services - the biggest part of the United Kingdom economy - grew 0.6 per cent in the fourth quarter, though downward revisions to components including distribution, hotels and restaurants contributed to the revision in headline GDP. The annual number is down from the 1.9% investment growth seen in 2016. "Yet, despite more people employed in the United Kingdom than ever before, this just isn't feeding through into our pay packets".

Another report from ONS showed that the British budget balance showed its second highest January surplus on record. Businesses, too, have taken a more cautious approach on investment as they seek clarity over the post-Brexit economic landscape.

The G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the US) saw economic growth of 0.5% during the same period.

Exports declined by 0.2 per cent, while imports jumped by 1.5 per cent, meaning net trade dragged on overall GDP growth, although this was distorted by the London-based global gold trade.

The figures from the Office for National Statistics (ONS) sent the pound half a cent lower against the United States dollar to just over $1.39.

"Unemployment remains relatively low by historical standards and there are still 10,000 fewer people unemployed in Scotland than this time previous year".

'The UK economy is still estimated to have slowed markedly in the first half of 2017 as higher inflation - linked primarily to the weaker pound after the Brexit vote - dampened real household spending power'.

The growth downgrade means the United Kingdom economy grew by only 1.7 per cent in 2017, lower than thought at first with a slower first quarter than earlier estimates.

"With the United Kingdom sliding to last place in the G7 economic leaderboard for 2017, early indications are that 2018 is off to a slow start too".

Chris Williamson, chief business economist at IHS Markit, said the figures contained mixed messages for Bank of England rate-setters.