Economic growth for the UK has slowed to 0.2% during the last quarter of 2018 as Brexit draws closer, according to new data released Monday by the Office for National Statistics (ONS).
Annual domestic GDP is the lowest it has been since 2012 as GDP for 2018 was just 1.4%, December GDP fell to 0.4% after it had grown to 0.2% during October and November.
Rob Kent-Smith, head of GDP at the Office for National Statistics said, “GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining.
“However, services continued to grow with the health sector, management consultants and IT all doing well.
“Declines were seen across the economy in December, but single month data can be volatile meaning quarterly figures often give a better indication of the health of the economy.
“The UK’s trade deficit widened slightly in the last three months of the year, while business investment again declined, now for the fourth quarter in a row.”
Sterling has fallen below $1.29 or half a cent following data released by the ONS.
Tej Parikh, senior economist at the Institute of Directors said, “The UK economy lost its summer exuberance in the final months of 2018, and there are signs of further chill winds ahead.
“The ongoing uncertainty around what happens after 29 March is the prime suspect behind sapped economic activity. “There is currently a drag on growth as some businesses are forced to hold back on major investments and engage in cautionary stockpiling.
“The first half of 2019 will bring further challenges for the UK economy. China’s slowdown and weak growth in Europe are likely to bite at British exporters.
“At the same time, while consumers have shown resilience so far, many are becoming increasingly cautious with their wallets.
“The clock is ticking but if a Brexit deal can be agreed, things should start to look sunnier as pent-up demand is released and firms begin investing again.”
But, Samuel Tombs, chief UK economist at Pantheon Macroeconomics said, “On the face of it, the sharp fall in GDP in December looks alarming, but it isn’t unprecedented… and it was driven by sectors which have historically been volatile.
“All in all, today’s data bring clear signs that Brexit uncertainty is depressing the economy, but we would not rush to conclude yet that GDP is on track to fall outright in the first quarter.”
Yael Selfin, chief economist at KPMG UK said, “Continued Brexit-related uncertainty and a weaker global economic backdrop saw the UK economy further decelerate in the fourth quarter of 2018. The outlook for the first quarter of 2019 is relatively bleak while uncertainty remains so high, with Q1 potentially lost.
“It is particularly worrying to see business investment contracting significantly again, as it will impact the UK’s longer term productive capacity as well as productivity performance, and points at a low vote of confidence from business in the UK’s future. The contraction in manufacturing, despite the relatively weak pound and while the UK economy is still enjoying the benefits of the EU trade framework is also a worry for what to come.
“As on many other occasions, the economy was bolstered by households who continued to spend, albeit more reluctantly, and by a pick-up in government spending, which will not be sustainable in the long run. We need to see a recovery in business confidence and investment to get the UK economy moving again.”
Andy Soloman business growth expert and Yomdel CEO said, “We’ve seen the impact our continued Brexit debacle is having on areas like the property market, but whichever way you look at it, it’s clear this detriment reaches right across the UK economy.
The slowest rate of annual growth in six years and a month on month decline demonstrates the fragile position we find ourselves in, however, this is not an indication of an imminent recession.
It is simply a snapshot at a time where wavering consumer sentiment is hitting our retail and motor trades in particular, whilst many businesses hold back on investment until the future of our economic landscape becomes clearer.
Add to this the limbo we find ourselves in with regard to a Brexit deal and it’s hardly surprising that the economy isn’t firing on all cylinders.”