Economic growth in 2018 confirmed as weakest since 2012
UK economic growth slowed in the final quarter of last year, making 2018 one of the weakest years since the financial crisis.
UK Gross Domestic Product (GDP) was just 0.2% in the final quarter of last year, the Office for National Statistics (ONS) confirmed.
The unrevised figure shows that the UK’s GDP grew by 1.4% in 2018, compared with 1.8% in 2017.
This makes it the joint worst year of growth since the 2008 financial crisis. GDP last increased by 1.4% in 2012 and has not been weaker since 2009.
The ONS revised its estimate for the third quarter (July to September) up slightly to 0.7%. Growth in the period was boosted by the one-off effects of the World Cup and warm weather.
Upward revisions were also made to business investment levels for the fourth quarter, but the measure still fell for four consecutive quarters.
This is the first full year of decline since 2009 and was driven mostly by lower investment in transport equipment as well as IT equipment and other machinery.
Business investment is now estimated to have fallen by 0.9% in the fourth quarter, compared with a previous estimate of 1.4%. Late survey returns affected the final figure.
Overall business investment in the UK was down 0.4% compared with 2017.
Meanwhile, household consumption slowed slightly to 0.3% in the fourth quarter, with confidence subdued amid economic uncertainty.
Across the year, consumption was up 1.8%. This was slower than previous years, primarily due to lower household spending on recreation and culture, as well as transport.
Howard Archer, chief economic adviser at EY Item Club, said: “The UK economy changed down to a lower gear in the latter months of 2018 as it was hampered by heightened Brexit uncertainties and weakening global economic activity.
“Businesses reluctance to invest intensified, while the upside for consumer spending seemed limited despite a pick-up in their purchasing power. Nevertheless, consumers clearly showed more resilience in the fourth quarter than businesses.”
The data comes on the day the UK had been scheduled to leave the EU. However a new departure date has not yet been decided, after a short extension was granted.
Mr Archer said: “If the UK does manage to leave the EU with a deal during the second quarter, we believe that there are the domestic ingredients for a pick-up in growth.
“Nevertheless, we have cut our GDP growth forecast for 2019 to 1.2%, as a consequence of extended Brexit uncertainties weighing on business activities and investment in particular, as well as weakened global growth.”