UK economic growth slowed in Q4 of 2018, the weakest since 2012

Deal or no-deal, Brexit is already impacting the economy which could continue.

Article updated: 11 February 2019 1:00pm Author: Helal Miah

  • UK gross domestic product (GDP) grew 0.2% in Q4 2018.
  • Analyst points to Brexit uncertainty as the main factor.
  • It is expected the next few weeks/months will probably continue to see the malaise lead to reduced economic activity.

The Brexit impasse is now really showing through onto UK economic activity levels; Q4 2018 GDP preliminary figures this morning have not made pleasant reading. We were already anticipating a halving of the growth rate from Q3 of 0.6%, but the actual Q4 growth rate has come out at just 0.2%, while the year on year figure also slowed down to 1.3% from the anticipated 1.3%, the lowest since 2012.

The GDP figures were dragged lower by the lower manufacturing of cars, steel products and slowing construction sector activity, some of which economists say have felt the direct impact of lower investment spending and businesses taking a “wait and see” approach before making any major investment commitments. This is much more telling in the GDP figures for December where activity fell by 0.4%. The release of December’s Industrial Production and Manufacturing Production numbers, which were released at the same time, reflect this with both being down, 0.5% and 0.7% respectively. However, the UK’s most important services sector bucked the trend as the health, IT and management consultancy sectors continued to do well.

The UK economy is clearly being hampered by Brexit uncertainty, although some Brexiteers may point to slowing activity in our major trading partners as the explanatory factor. However, we feel that assurances over the political environment is needed sooner rather than later for businesses to release pent up investment funds, but the next few weeks/months will probably continue to see the malaise lead to reduced economic activity.

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Helal Miah

Investment Research Analyst

After graduating with an economics degree from University College London, Helal started his career within private banking at Smith & Williamson Investment Management and later held analyst and fund manager roles with the Industrial Bank of Japan, Schroders and Mitsubishi Corporation. He is a chartered fellow of the Chartered Institute for Securities & Investment. 

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