Weak car sales and manufacturing figures drive slow growth for economy

0 ‘Ongoing uncertainty can limit investment,’ says Archer Britain’s economy suffered a slowdown in the three months to October as car sales and the manufacturing sector suffered amid continued Brexit uncertainty.

UK GDP (gross domestic product) grew just 0.1 per cent month on month in October, according to the Office for National Statistics (ONS).

Over the three months to October, GDP increased 0.4 per cent from the previous quarter. This compares to 0.6 per cent recorded in the three months to September.

The manufacture of motor vehicles fell by 6.6 per cent in October, due in part to the impact of factory shutdowns, while overall growth in manufacturing contracted by 0.9 per cent from September. Growth in construction fell by 0.2 per cent over the same period, while services activity rose by the same margin.

This came as Theresa May postponed a vote to win parliamentary approval for her Brexit deal, which the UK government has admitted will act as a further restraint on the economy compared to the UK’S current deal as an EU member. However, a no-deal Brexit, where Britain exits the EU out without an exit agreement in March, is widely tipped to plunge the economy into recession.

Howard Archer, chief economic advisor to the EY Item Club, said: “On the assumption that a Brexit deal is ultimately agreed, we expect GDP growth to improve modestly to 1.5 per cent in 2019. Consumer spending should be supported by a gradual improvement in consumer purchasing power as earnings growth firms and inflation eases back overall during the year.

“Meanwhile, business investment should also benefit. But, ongoing uncertainties about the longer-term UK-EU relationship are likely to limit the upside for business investment.”