UK gross domestic product rose by 0.6 per cent in the third quarter, in line with economists’ expectations, but business investment dropped by 1.2%, official figures show.
The EY ITEM Club think-tank highlighted the fact the UK economy had been softer at the end of the third quarter than at the start. It noted GDP was flat month-on-month in September, as it had been in August, having spiked by 0.3% during July, and flagged a boost to consumer spending from the heatwave and World Cup.
The think-tank added: “We suspect that third-quarter GDP growth of 0.6% quarter-on-quarter will be as good as it gets for some time to come.”
The 0.6% growth was the strongest quarterly expansion recorded by the UK since the final three months of 2016. The UK grew by only 0.1% and 0.4% respectively in the first and second quarters. UK manufacturing output recorded its first quarterly rise in 2018 during the July to September period, increasing by 0.6%. Services output grew 0.4%. Construction output rose 2.1%.
Household spending grew by 0.5% during the third quarter.
Howard Archer, chief economic adviser to the EY ITEM Club think-tank, said: “Disappointingly and worryingly, business investment fell 1.2% quarter-on-quarter, which was a third successive decline and caused it to be down 1.9% year-on-year.”
Business investment declined by 0.5% in the first quarter and by 0.7% in the three months to June.
Mr Archer said: “This strongly suggests businesses were cautious over investment as doubts mounted as to whether a Brexit transition arrangement would be agreed next March and companies looked for greater clarity over the UK’s likely long-term relationship with the EU.”
He added: “We expect GDP growth to be limited to 1.3% in 2018, which would be the weakest performance since 2009 and down from expansion of 1.7% in 2017.”
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