Weak British output data triggers growth concerns

LONDON: Britain’s industrial output fell more than anticipated in February in a sign that the economic resilience seen after the Brexit referendum could be starting to crumble, official data showed on Friday.

Industrial output contracted by 0.7 per cent in February, after already shrinking 0.3 per cent the previous month, the Office of National Statistics (ONS) calculated.

Analysts pencilled in a more modest decline of 0.2 per cent for February.

Output in the energy sector contracted the most, the ONS said, as relatively warm temperatures in February led to “a decrease in domestic energy demand and, subsequently, gas and electricity production.”

But declines were seen across all sectors, with the manufacturing output dipping by 0.1 per cent monthon-month.

Analysts described disappointing.

The numbers “fuel suspicion that GDP (gross domestic product) growth (has) slowed markedly, largely due to consumers becoming more cautious”, said IHS Markit Economist Howard Archer.

“There is also evidence that some clients are reluctant to commit to major projects in an uncertain the data as environment,” he added, as Britain begins a two-year process of leaving the European Union.

Looking ahead, economists expect Brexit-fuelled uncertainties and rising inflation caused by a weak pound and rising oil prices to crimp British growth, which was 1.8 per cent in 2016.

Bank of England governor Mark Carney on Friday warned of the consequences for Britain’s crucial finance sector of leaving the EU without a deal, although said he was optimistic an agreement could be reached.

“We start from a position where the high road is both readily attainable and highly desirable for all involved,” he said, but added that jobs and growth were on the line.

Others believe that the February data may be unusually pessimistic, as it was driven by volatile sectors.

“Despite the disappointing data in February, with temporary factors at play, we remain optimistic that we should see some bounce back,” said Ruth Gregory from Capital Economics.

She predicted “decent” growth of around 0.5 per cent in the first quarter. Britain’s trade figures also came in worse than expected, with the deficit widening by £0.7 billion to £3.7 billion in February.