THE UK economy expanded by just 0.2 per cent in the fourth quarter of 2018, official figures have shown, as Brexit uncertainty took a heavy toll on activity.
Steep falls in the manufacturing of cars and steel products and a drop in construction activity were cited, as growth slipped back from 0.6 per cent the previous quarter.
And business investment tumbled 1.4%, meaning rowth on this measure has now fallen for four consecutive quarters. It suggests companies are continuing to put investment decisions on hold while they await a breakthrough on Brexit.
READ MORE: Ian McConnell: Sick to the back teeth of Brexiters' dangerous and frightening fantasy
Official figures show that activity was particularly constrained in December, when gross domestic product (GDP) contracted by 0.4%.
The Office for National Statistics said real GDP growth slowed markedly in the fourth quarter after a pick-up in activity in the summer months because of the warm weather and the football World Cup.
The agency estimates that year-on-year growth eased back to 1.3% in the fourth quarter, after edging up to 1.5% in the third quarter. And it estimates that UK GDP grew by 1.4% in 2018, down from 1.8% in 2017, which, along with its performance in 2012, represents its weakest growth since 2009.
The figures come after Bank of England Governor Mark Carney warned last week of the negative effects from the “fog of Brexit” on business investment and consumer confidence.
READ MORE: Worries over dearth of office building in two Scottish cities
The Bank cut growth forecast for 2019 from 1.7% to 1.2%, which would be its weakest expansion since the financial crisis of 2008 and 2009.
Sterling was down 0.56% Sterling was down 0.56 per cent against the dollar at $1.29 at 5pm last night.
Ben Bretell at Hargreaves Lansdown, said: “There’s little doubt Brexit uncertainty is responsible for the disappointing numbers, though concerns over global trade will also have played a part. Business investment – the most Brexit-sensitive element of GDP - dropped 3.7% Q4 against a year earlier, the biggest fall since early 2010.”
Howard Archer of the EY ITEM Club, said: “Monthly GDP data showed the economy ended 2018 flat on its back as it contracted 0.4% month-on-month in December, with all sectors struggling.
"Output in the dominant services sector fell 0.2% month-on-month as it was impacted by a marked drop in retail activity."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here