UK economic growth slowest since 2012

The UK economy expanded at its slowest annual rate in six years in 2018 after a sharp contraction in December.

Growth in the year was 1.4%, down from 1.8% in 2017 and the slowest rate since 2012, the Office for National Statistics (ONS) said.

The ONS blamed falls in factory output and car production for the slowdown, among other factors.

It follows forecasts of slower growth in 2019 due to Brexit uncertainty and a weaker global economy.

According to the ONS, quarterly growth also slowed, falling to 0.2% in the three months to December – down from 0.6% in the three months to September.

However, Chancellor Philip Hammond said the data showed the economy remained “fundamentally strong” and that he did not foresee a recession.

The pound fell by a third of a cent to below $1.29 following the news.

Head of GDP at the ONS Rob Kent-Smith said: “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.

“However, services continued to grow with the health sector, management consultants and IT all doing well.”

A slowdown was expected. But the economy has hit the brakes harder than economists thought it would.

Growth over the quarter was weaker than the 0.3% anticipated. And over the month the numbers look positively worrying.

According to the ONS estimates, gross domestic product fell in December by 0.4%.

That included a drop-in services activity (restaurants and retail etc), which is estimated to have fallen by 0.2% on the month.

This is the only time since 2012 that services, construction and production all fell.

While that chimes in with the gloomy picture painted by, for example, retailers’ company results, it’s not by any means a certain sign we are entering a new recession.

This is only the first estimate by the ONS; the figures are provisional and are often revised when the second and third, more accurate figures arrive.

You can’t be sure you should worry about the state of economic growth. But then again, you can’t be sure you shouldn’t.

TNT Business

Photo Credit: Ralf Steinberger

Related News