Economic growth slumps to 0.2%
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.
But Prime Minister Theresa May’s official spokesman said: “The UK economy continues to grow and remains fundamentally strong.”
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 Brexitrelated concerns weighed on business-tobusiness spending at the end of 2018.
Speaking about the impact of a potential no-deal Brexit on the economy, Chancellor Philip Hammond said: “Business is challenged, I accept that, but we can’t convey information that we don’t have. We don’t know how some of our partners on the other side of the channel will behave in the event of no-deal Brexit.
“My judgment is that we are likely to get the (Prime Minister’s) deal through Parliament, but I can’t be 100% certain, and that is why we are doing the contingency planning we are doing. Once businesses have clarity, they will invest again.
“No-deal would be a very bad outcome for our economy.”
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.”
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.