As per the latest data release by Office for National Statistics (ONS) of United Kingdom (U.K.), the U.K. economy
grew at 1.4% in 2018, its slowest pace since 2012. The growth in the year 2017 was 1.8%.
Impacted by the data, the pound also fell by a third of a cent to below U.S. $ 1.29.
The ONS has also predicted a further slow growth in 2019 due to the uncertainty prevailing regarding the Brexit deal. Besides, downfall in factory output and car production were also responsible for the slowdown.
The consumer sentiments, exports and business investments were severely impacted owing to the lack of a clarity regarding the outcome of Britain leaving the European Union (EU) on March 29, 2019. The Japan based car manufacturer Nissan has cancelled plans of building a new car model in Britain, majorly due to Brexit uncertainties in the market. Airbus, which makes wings for commercial aircraft in Britain, is also mulling moving out investment elsewhere
The Prime Minister of U.K. – Theresa May is struggling to get the Parliament’s support for her plan with Brussels, to avoid re-imposing checks on goods exported from Britain.
Head of GDP at the ONS – Rob Kent-Smith, 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.”
Head of Economics and Business Finance at British Chambers of Commerce – Suren Thiru said, “Brexit uncertainty, a slowing global economy and the persistent financial squeeze on consumers and businesses (are) increasingly having a suffocating effect on economic activity.”
The growth for October-December 2018 quarter was 0.2.% as against 0.6% for the July-September 2018 quarter. This was even lesser than the 0.3% anticipated growth for the October-December 2018 quarter.
The Gross Domestic Product (GDP) fell by 0.4% in December 2018. For the last quarter of 2018, car manufacturing, construction and business investment fell by 4.9%, 0.3% and 1.4% respectively. As regards exports, they witnessed a fall of 0.9% as compared to last year.
According to Bank of England, Brexit and slowing of Chinese economy impacted the U.K. economy. For the records, the Chinese economy grew at 6.6% in 2018, its slowest rate since 1990.
Separately, U.K.’s National Institute of Economic and Social Research has said that in case of no Brexit deal, the economy would move around zero for the next 2 years. However, even in worst scenario, the recession can be avoided provided inflation and wage growth stay in check and policy makers responded come up with measures to support the economy.
