UK sinks to bottom of G7

Economic growth hit by Brexit uncertainty

THE Government suffered another huge pre-Brexit blow yesterday when it was revealed that the UK economy has slumped to last place in the G7.

The Office for National Statistics reported that it had revised UK gross domestic product growth to 0.4% in the fourth quarter of 2017, down from previous estimates of 0.5%.

The year-on-year economic growth of 1.4% in the last three months was not just the UK’s worst performance in five years, but means it is also now the weakest of any of the economies in the powerhouse Group of Seven. That includes traditional slowcoaches such as Japan and Italy.

Wage and price pressures on consumers contributed to the drop. The ONS said household spending grew by 1.8% between 2016 and 2017, its slowest rate of annual growth since 2012. Business investment was also flat.

“Services continued to drive growth at the end of 2017, but we saw a number of consumer-facing industries slowing, as price rises led to household budgets being squeezed,” Darren Morgan, the ONS’s head of GDP said.

Compounding the grim news was the latest CBI Quarterly Distributive Trades Survey which revealed that retail sales growth had slowed for the third month in a row, with sales slumping in clothing, department stores and furniture.

Samuel Tombs of Pantheon Macroeconomics said the data may make the Bank of England think twice about an interest rate hike.

“The economy remains fragile and does not need to be cooled with another rate rise,” he said.

Jacob Deppe, Head of Trading at online trading platform Infinox commented: “Any domestic-led growth is likely to be held in check by the continuing lack of clarity over Brexit.”