Breaking News
0

UK economy at weakest since 2012, as Brexit, global worries bite

Economic IndicatorsFeb 11, 2019 18:46
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Buildings in the City of London are seen behind Waterloo Bridge in London

By David Milliken and Andy Bruce

LONDON (Reuters) - Britain's economy slowed sharply in late 2018, pushing annual growth to a six-year low as worries about Brexit hammered business investment and a weakening global economy weighed on trade, data showed on Monday.

Quarterly growth fell to 0.2 percent between October and December from 0.6 percent in the previous quarter, in line with forecasts in a Reuters poll, while output in December alone dropped by the most since 2016.

"Brexit uncertainty, a slowing global economy and the persistent financial squeeze on consumers and businesses (are) increasingly having a suffocating effect on economic activity," British Chambers of Commerce economist Suren Thiru said.

Sterling fell a third of a cent to below $1.29 after the data, before recovering.

Businesses are increasingly concerned about the lack of a plan for March 29, when Britain is due to leave the European Union.

Prime Minister Theresa May has faced strong parliamentary opposition to an agreement she reached with Brussels to avoid reimposing checks on goods exported from Britain.

For 2018 as a whole, UK growth dropped to its lowest since 2012 at 1.4 percent, down from 1.8 percent in 2017 and weaker than the euro zone, which has outpaced Britain since 2016.

Last week the Bank of England chopped its forecast for growth this year by 0.5 percentage points to 1.2 percent, which would be the weakest year since the 2009 recession.

Other major economies around the world also slowed in late 2018, due in part to trade tensions between the United States and China.

Monday's data showed a net trade deficit lopped more than 0.1 percentage points from Britain's fourth-quarter growth rate. Falling business investment did similar damage.

Japanese carmaker Nissan cancelled plans to build a new car model in Britain last week, saying Brexit uncertainties made it harder to plan for the future.

"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," Office for National Statistics statistician Rob Kent-Smith said.

In December alone, the economy contracted by 0.4 percent, the biggest fall since March 2016.

Chancellor Philip Hammond said the data showed the economy remained "fundamentally strong" and that Britain's Office for Budget Responsibility did not foresee a recession.

"The economy has come in ahead of the OBR's forecast for 2018, and that is in the context of a weakening world economy and increasing concerns about trade tensions around the world," he told the BBC.

Business investment dropped 3.7 percent in the fourth quarter compared with a year earlier, the biggest fall since the first three months of 2010, when Britain was emerging from recession. Investment has contracted for four consecutive quarters, the longest run since the third quarter of 2009.

Household spending - which offered an unexpectedly strong boost to growth in mid-2018 - remained resilient, up 1.9 percent on a year ago, and government spending picked up.

UK economy at weakest since 2012, as Brexit, global worries bite
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Arthur Jager
Arthur Jager Feb 11, 2019 10:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
So why is the FTSE up again?! This market makes no sense.
Reply
0 0
Ben Delaney
Ben Delaney Feb 11, 2019 10:06
Saved. See Saved Items.
This comment has already been saved in your Saved Items
weak growth has been expected since brexit so its "priced in" for the long term but this confirmation of weak growth confirms that the chance of boe raising interest rates is virtually impossible. it also hints at a possible rate cut at the end of the year if a recession is forecast these are all bullish for indices, and short term weaker sterling. china/us trade talks all bullish,
Reply
2 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email