Economy slows rapidly amid weak trade and investment

Cornelia Mascio
Febbraio 11, 2019

An employee operates a forklift to move goods at the Miniclipper Logistics warehouse in Leighton Buzzard, Britain December 3, 2018.

"Following a pickup in activity over the summer months - in part due to warm weather and the World Cup - real GDP growth slowed markedly in the final quarter of 2018, with GDP falling by 0.4 per cent in the month of December", the ONS said.

Sterling fell by a third of a cent to below $1.29.

For 2018 as a whole, growth dropped to its lowest since 2012 at 1.4 percent, down from 1.8 percent in 2017.

Economists tend to focus on the three-month figures, as monthly GDP snapshots can be prone to revision, but the scale of the decline in December is likely to be seen as a sign of the economy losing momentum as Brexit draws nearer.

The Bank of England last week stressed that Britain's economic output was also being dragged down by a global slowdown, with growth dampening in China, the United States and the eurozone.

Business investment decreased by 1.4 per cent in the last quarter, the fourth consecutive quarter in which there has been a decrease in growth.

Monday's data showed net trade lopped more than 0.1 percentage points from the fourth-quarter growth rate.

Gross domestic product growth stood at 1.4 per cent a year ago, down from 1.8 per cent in 2017, while growth was only 0.2 per cent in the last three months of 2018, the Office for National Statistics said in a statement.

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

Finance minister Philip Hammond said the data showed the economy remained "fundamentally strong" and that public-sector forecasters did not foresee a recession.

The figures revealed that business investment fell for the fourth quarter in a row - in a first since the last recession in 2009 - as the lack of clarity over Britain's future trading relationship with the European Union led companies to pause their investment plans. This marked the longest negative run since September 2008 to February 2009, the depths of the financial crisis.

The BoE expects business and housing investment to fall this year, and for export growth to halve.

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