Hammond’s Brexit fears as economic growth falls
CHANCELLOR Philip Hammond warned of the impact of Brexit uncertainty on the economy last night after figures showed 2018 was the worst year for growth since the financial crisis.
The UK managed economic growth of just 1.4 per cent in 2018 – its lowest level since 2012, when the country was emerging from recession. Growth in the final three months of 2018 was just 0.2 per cent.
Mr Hammond said the political turmoil over Britain’s departure from the European Union was damaging the economy, amid signs of a slump in business investment and falling consumer confidence.
The Chancellor added: ‘It’s a solid performance from the economy when you look at what’s happening globally and in other competitor countries.
‘But of course there is no doubt that our economy is being overshadowed by the uncertainty created by the Brexit
‘Overshadowed by uncertainty’
process.’ It is feared the slowdown could continue in 2019, with yesterday’s figures from the Office for National Statistics (ONS) showing the sharp drop-off at the end of last year.
The economy actually contracted in December, shrinking by 0.4 per cent from the previous month. Monthly figures tend to swing wildly, meaning this dip could well be temporary. However, it suggests the start to this year is likely to be bleak.
January and February are traditionally tough months because consumers rein in their spending after a festive blowout. The Bank of England has already warned there is a one-in-four chance of a recession this year.
Ben Brettell, senior economist at savings firm Hargreaves Lansdown, said: ‘There’s little doubt Brexit uncertainty is responsible for the disappointing numbers, though concerns over global trade will also have played a part.’ Suren Thiru, head of economics at the British Chambers of Commerce, added: ‘It is increasingly likely that the slowdown at the end of 2018 will persist as continued Brexit uncertainty and the raised possibility of a No Deal exit from the EU weigh heavily on UK’s growth prospects.’
Businesses have cut back sharply as Brexit gets closer, with investment down 1.4 per cent in the final three months of the year, its fourth quarter of decline in a row.
Not knowing what our trading relationship with the EU will look like makes it harder to plan, build new factories or buy fresh equipment.
Output continued to grow in the crucial services sector – which includes everything from banking to hairdressing, and accounts for four-fifths of the British economy. But the UK’s manufacturing and construction sectors both shrank.
Rob Kent- Smith, of the ONS, said: ‘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.’