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Brexit helped punch a hole in UK economic growth

Yahoo! Finance UK logo Yahoo! Finance UK 11/02/2019 Lianna Brinded

© Getty UK economic growth slowed in the fourth quarter last year amid disruption to retail and industrial sectors borne from Brexit related fears as well as the seasonal effect of Black Friday on retailers.

The UK economy grew just 0.2% in the three months to December versus general consensus that economic growth would be at just 0.3% quarter-on-quarter and 1.4% year-on-year.

These figures follow a 0.4% growth rate for the three months to October and a 0.6% rise in third quarter GDP.

Economists widely emphasised that the dampened economic growth figures shouldn’t be read as the UK heading for a recession.

Brexit in-depth: All the latest news, analysis and expert opinion

They said Black Friday, 29 November last year, has a seasonal effect on retailers. The number of companies stockpiling goods, such as supermarkets and manufacturers, also played a part in the numbers because the PMI calculation includes buying volumes. If you strip out that factor, the output index actually fell in December.

It is also likely that sector growth, such as oil and gas, slowed due to events such as the Buzzard oil field closure. That field accounts for around 13% of total UK oil production. 

On top of that, the Society of Motor Manufacturers and Traders (SMMT) put the UK auto industry on “red alert” after investment in the sector almost halved in 2018 and the threat of a no-deal Brexit grows.

The SMMT also recently reported that December car production recorded a decline of 0.3%.

Watch: Carney: Economy not prepared for 'no deal' Brexit (ITN)

Earlier today, the Institute for Fiscal Studies warned that “a disorderly Brexit would be likely to lead to lower economic growth in the short and long run.” It said in its latest report, entitled The outlook for the 2019 Spending Review, that a no-deal Brexit, which is when the UK crashes out of the European Union without a deal in place, would also hit several industries disproportionately.

Recently, another think tank Centre for European Reform (CER) said voting for Brexit has caused the economy to shrink 2.3% smaller than if Brits had voted to remain in the EU.

Last month, UK business investment suffered its biggest fall in three years due to Brexit uncertainty.

© Getty

The IMF also said in November that the Brexit process has affected business investment in the UK. Britain’s biggest business lobby group CBI, representing 190,000 firms, also released a study showing that 80% of companies say that Brexit has hit investment.

And in September, the Office for National Statistics (ONS) revealed that businesses have invested £22bn less in the last two and a half years because of Brexit uncertainty.

Related: How companies are reacting to Brexit (Photos)


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