UK economic growth slowest since 2012

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Automobile manufacturing fell sharply within the final three months of the 12 months

The UK economic system expanded at its slowest annual charge in six years in 2018 after a pointy contraction in December.

Progress within the 12 months was 1.four%, down from 1.eight% in 2017 and the slowest charge since 2012, the Workplace for Nationwide Statistics (ONS) stated.

The ONS blamed falls in manufacturing facility output and automobile manufacturing for the slowdown, amongst different elements.

It follows forecasts of slower development in 2019 on account of Brexit uncertainty and a weaker international economic system.

Based on the ONS, quarterly development additionally slowed, falling to zero.2% within the three months to December – down from zero.6% within the three months to September.

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Head of GDP on the ONS, Rob Kent-Smith stated: “GDP slowed within the final three months of the 12 months with the manufacturing of vehicles and metal merchandise seeing steep falls and development additionally declining.

“Nonetheless, companies continued to develop with the well being sector, administration consultants and IT all doing properly.”


Evaluation:

By Andy Verity, BBC economics correspondent

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A slowdown was anticipated. However the economic system has hit the brakes more durable than economists thought it will.

Progress over the quarter was weaker than the zero.three% anticipated. And over the month the numbers look positively worrying.

Based on the ONS estimates, gross home product fell in December by zero.four%.

That included a drop in companies exercise (eating places and retail and so on), which is estimated to have fallen by zero.2% on the month.

That is the one time since 2012 that companies, development and manufacturing all fell.

Whereas that chimes in with the gloomy image painted by, for instance, retailers’ firm outcomes, it isn’t by any means a sure signal we’re coming into a brand new recession.

That is solely the primary estimate by the ONS; the figures are provisional and are sometimes revised when the second and third, extra correct figures arrive.

You possibly can’t make certain you must fear concerning the state of financial development. However then once more, you’ll be able to’t make certain you should not.


Which sectors are struggling?

The ONS stated the figures mirrored a slowdown throughout quite a few industries, as Brexit-related issues weighed on enterprise spending choices.

Within the last quarter of final 12 months, it discovered automobile manufacturing declined at its steepest charge in just below a decade, slipping four.9%.

Building fell zero.three% whereas enterprise funding dropped 1.four%.

Whereas Britain’s dominant companies sector continued to broaden, development slowed to zero.four% following a robust efficiency through the summer time.

The 1.four% development determine for 2018 was the bottom since 2012, when the economic system additionally grew by 1.four%. The final time the economic system carried out worse than this was in 2009, when it contracted by four.2%.

Is Brexit guilty?

Tej Parikh, senior economist on the Institute of Administrators, stated the persevering with uncertainty round Brexit was the “prime suspect” behind weaker financial exercise.

“There’s at present a drag on development as some companies are pressured to carry again on main investments and have interaction in cautionary stockpiling.

“The primary half of 2019 will convey additional challenges for the UK economic system. China’s slowdown and weak development in Europe are more likely to chunk at British exporters.”

Ben Brettell, senior economist, at Hargreaves Lansdown stated: “There’s little doubt Brexit uncertainty is chargeable for the disappointing numbers, although issues over international commerce can even have performed a component.”

Is a recession forward?

Final week, the Financial institution of England forecast development this 12 months can be 1.2% – the slowest since 2009 when the economic system was in recession.

It even sees a one-in-four likelihood of the economic system slipping into recession within the second half of this 12 months.

However Samuel Tombs, chief UK economist at Pantheon Macroeconomics, stated an impending downturn was unlikely.

“On the face of it, the sharp fall in GDP in December seems alarming, however it is not unprecedented… and it was pushed by sectors which have traditionally been risky.”

Paul Dales, chief UK economist at Capital Economics, stated: “There’s little hope of a rebound early this 12 months. But when there is a silver lining, it is that quite a lot of the exercise placed on maintain forward of Brexit may very well be launched as soon as – or if – a deal is completed.”

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