There’s no sign yet of an economic dividend ahead of Britain leaving the European Union at the end of next month.
Chancellor Philip Hammond blamed Brexit uncertainty for the UK economy expanding at its slowest annual rate in six years.
Figures released yesterday by the Office for National Statistics (ONS) showed GDP growth at 1.4% in 2018, down from 1.8% in 2017. For the final three months of 2018, GDP growth slumped to 0.2%, down from 0.6% in the third quarter.
The GDP figures showed that in the month of December all three drivers of the economy fell: services, production and construction.
Despite the slump, Hammond described the figures as a “solid performance” compared with other countries. “The UK is currently enjoying the longest unbroken quarterly growth streak of any G7 nation,” he said.
But, Hammond conceded that Brexit uncertainty is taking its toll. He told Sky News: “Of course there is no doubt that the economy is being overshadowed by the Brexit proves. The sooner we can resolve that the better, and the quicker we can get back to more robust growth in the future.”
The saving grace for the economy has been UK consumer spending, which has remained “robust”, points out Jake Robbins, a fund manager at Premier Asset Management.
He adds: “This has prevented the economy from experiencing a quarterly contraction as of yet, although with plenty of poor economic data globally this can’t be dismissed as a possibility going into 2019.”
Robbins adds that not only is Brexit uncertainty weighing on business confidence, as evidenced by persistently falling capital investment, but economic troubles across the EU (still our biggest trading partner) are dampening industrial production and export growth.
“With this fragile external economic environment, any adverse economic effects from Brexit would likely see considerable weakness in the UK economy, the timing of which is turning out to be quite poor for such a seismic shift in trade relations,” says Robbins.
Other experts, including Helal Miah, investment research analyst at The Share Centre, agree that the Brexit impasse is now really showing through onto UK economic activity levels.
Miah adds: “The UK economy is clearly being hampered by Brexit uncertainty, although some Brexiteers may point to slowing activity in our major trading partners as the explanatory factor. However, we feel that assurances over the political environment are needed sooner rather than later for businesses to release pent-up investment funds, but the next few weeks/months will probably continue to see the malaise lead to reduced economic activity.”