UK growth hits 6-month low, manufacturing slides
Worries about the global economy have been mounting while a Brexit deal remains uncertain
LONDON — Britain’s economy cooled in the three months to November, expanding at its weakest pace in six months as factories suffered from tough global trade conditions ahead of Brexit, official data showed yesterday.
Gross domestic product in the three months to November was 0.3 per cent higher than in the previous three-month period, down from growth of 0.4 per cent in the three months to October and matching the consensus of a Reuters poll of economists.
Manufacturers suffered their longest period of monthly falls in output since the financial crisis, hurt by weaker overseas demand, the Office for National Statistics said.
Worries about the global economy have been mounting due to concerns about a trade war between the US and China. Figures from Germany and France earlier this week similarly showed falling industrial output
Britain’s economic growth in the three months to November was driven mostly by the dominant services sector, as well as the construction industry.
The figures fit with business and consumer surveys that suggest the economy is slowing sharply after robust growth of 0.6 per cent in the third quarter of the year, reflecting growing uncer- tainty ahead of Britain’s planned departure from the EU, as well as global jitters.
Britain is due to leave the EU on March 29 and whether businesses will still be able to trade without disruption to cross-border supply chains remains unclear.
The future of the deal which Prime Minister Theresa May has agreed in principle with the EU hangs in the balance ahead of a parliamentary vote which will take place on Tuesday.
May is widely expected to lose and this would leave open the prospect of Britain leaving the EU without any transitional arrangements to smooth the economic shock.
Calls for a second referendum – which May has rejected – are growing.
Yesterday’s figures showed that compared with a year earlier, the economy stood 1.4 per cent larger. In November alone, it expanded 0.2 per cent, compared with forecasts for a rise of 0.1 per cent.
The data are broadly in line with the Bank of England’s view that the economy is likely to have grown around 0.2 per cent over the fourth quarter of 2018.
Britain’s economy slowed after the June 2016 Brexit vote, its growth rate slipping from top spot among the Group of Seven group of rich nations to mid-table or lower.
Consumers in particular were squeezed by the jump in inflation which followed the pound’s tumble after the referendum, especially as wages have failed to keep up.
That said, an unusually warm summer in mid-2018 encouraged many to splash out on drinks and pub and restaurant visits.
But retail sales data suggests consumers reined in spending over Christmas.
Earlier this week closely watched purchasing managers’ surveys pointed to fourth-quarter growth of around 0.1 percent in Britain, according to data firm IHS Markit which compiles the surveys.
Yesterday’s data showed that Britain’s services sector grew by 0.3 per cent over the three months to November, while industrial output dropped by 0.8 per cent, the biggest decline since May 2017.
Looking at November alone, industrial output dropped 1.5 per cent on the year - the biggest fall since August 2013.
Separate figures showed Britain’s goods trade deficit widened unexpectedly in November to 12 billion pounds from 11.9 billion pounds, worsened by the highest oil imports since September 2014. — REUTERS