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UK's current account deficit bigger than expected

Britain's current account deficit was much bigger than expected in the fourth quarter, another warning sign about the sustainability of the country's economic recovery, official data showed on Friday.

The deficit in the October-December period was 22.4 billion pounds, down slightly from an all-time record 22.8 billion pounds in the third quarter.

Contributor | Bloomberg | Getty Images

Economists had expected a deficit of 14 billion pounds.

The Office for National Statistics said the deficit was being driven in part by a fall in income from investments earned abroad - which were lessened by the strengthening of sterling - as well as Britain's trade deficit.

The ONS confirmed that Britain's economy grew 0.7 percent in the October-December period of last year compared with the previous quarter and was 2.7 percent bigger than in the fourth quarter of 2012.

Economists had expected no change to the ONS' previous estimates on Britain's economic growth.

Full-year gross domestic product in 2013 was revised down to 1.7 percent from a previous estimate of 1.8 percent.

(Read more: CBI: Exports and investment to boost UK recovery)

The ONS also said Britain's dominant services sector got off to a solid start in 2014, growing 0.4 percent in January, picking up a bit of speed from December.

Data from the ONS released on Thursday showed that retail sales rose by more than expected in February, another sign of continued momentum in Britain's economy at the start of the year.

And a separate survey published earlier on Friday showed British consumer sentiment rose in March to its highest level since around the start of the financial crisis in 2007.

Despite Britain's stronger than expected recovery which began last year, total output is still 1.4 percent below the pre-financial crisis peak reached in the first three months of 2008 - a weaker situation than in almost all other big advanced economies.

The ONS said the savings ratio fell to 5.0 percent from 5.6 percent in the third quarter as weak growth in earnings prompted people to eat into their savings.

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