UK economy grows at slowest rate for six years

11 Feb 19

Growth in the UK economy last year slowed to its lowest rate since 2012 amid Brexit uncertainty, figures have shown. 

Data from the Office for National Statistics out today shows annual GDP growth for 2018 at just 1.4%, down from 1.8% in 2017.

This was due to a sharp drop in the final quarter of the year (October to December) to 0.2%, compared to 0.6% growth from July to September, according to the data.

James Smith, research director at the Resolution Foundation think-tank, linked the slower growth to Brexit, predicting it would further slow this year.

“Economic growth slowed markedly towards the end of 2018 amid weakening global outlook and heightened Brexit uncertainty”, Smith said.

“The sharp contraction in December, coupled with measures of economic uncertainty picking up in recent weeks, mean it is likely that we will see further slowing from here.”

He pointed out the UK economy was 1.2% smaller today than the Office for Budget Responsibility expected it to be before the 2016 referendum. The Resolution Foundation calculated every household in the UK was an average of £800 a year worse off due to growth being less than expected.

The ONS figures showed while the services sector (retail, IT, professional services) grew by 0.4% in the final quarter of 2018, production industries, such as manufacturing, contracted by 1.1% and construction by 0.3%.

Mark Robinson, chief executive of Scape Group a public-sector procurement body, said: “A boom in November and a strong Q3 could have hoodwinked the [construction] industry into thinking it was business as usual, but a sharp decrease in all work highlights the need for the government and local authorities to provide greater transparency on project pipelines to ensure business optimism does not dip as we head into 2019.”

Rob Kent-Smith, head of GDP at the ONS, 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.

“The UK’s trade deficit widened slightly in the last three months of the year, while business investment again decline, now for the fourth quarter in a row.”

ONS data from January showed that public borrowing rose to £3bn in December 2018.

Did you enjoy this article?