UK economic growth slowed in fourth quarter
UK economic growth slowed in the final quarter of last year as car manufacturing declined at its steepest rate in just under a decade.
Gross domestic product (GDP) growth fell to 0.2% between October and December, according to the Office for National Statistics (ONS).
This compares to 0.6% growth in the previous quarter, when warm weather and the World Cup contributed to a boost in economic activity.
Meanwhile, annual GDP increased by 1.4%, the weakest it has been since 2009.
Sterling tumbled following the news, dropping 0.4% versus the US dollar to 1.28. Against the euro, the pound was down 0.1% at 1.14.
Car production was down 4.9% in the period, marking the biggest decline since the first quarter of 2009.
Total production output slipped by 1.1%, the largest decline since the end of 2012. This included a 0.9% dip in manufacturing.
Construction was also lower, dropping 0.3% in the fourth quarter. This follows two consecutive quarters of growth during the summer, when companies caught up with work delayed by adverse weather early in the year.
Although services output was up, growth slowed to 0.4% following a relatively strong performance during the summer.
The ONS said it reflected a slowdown across a number of industries, as Brexit-related concerns weighed on business-to-business spending at the end of 2018.
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.
“Declines were seen across the economy in December, but single month data can be volatile meaning quarterly figures often give a better indication of the health of the economy.
“The UK’s trade deficit widened slightly in the last three months of the year, while business investment again declined, now for the fourth quarter in a row.”
Compared with the same quarter in 2017, the UK economy is estimated to have grown by 1.3%, the weakest in six years. It was last weaker in the second quarter of 2012.
On a month-to-month basis, GDP fell 0.4% in December. This was the biggest monthly drop since March 2016.
Separately, the ONS data dump showed that Britain’s total trade deficit widened slightly in the last three months of the year by £900 million to £10.4 billion, due to a rise in goods imports including cars and chemicals.