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Pound drops on worst UK growth figures since 2009 - 'Brexit impasse is showing'

Mirror logo Mirror 11/02/2019 James Andrews
© Getty

Economic growth in the UK slowed in the last three months of 2018 as car manufacturing fell at its steepest rate in just under a decade.

Gross domestic product (GDP) growth fell to 0.2% between October and December, according to the Office for National Statistics (ONS).

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

That's a third of the 0.6% growth in the previous three months, when warm weather and the World Cup boosted the economy.


Annual GDP increased by 1.4% - the weakest it has been since 2009.

The pound tumbled following the news, dropping 0.4% versus the dollar to $1.28. Against the euro, the pound was down 0.1% at €1.14.

“The Brexit impasse is now really showing through," said Helal Miah, investment research analyst at The Share Centre.

“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 is 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.”

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What's dropping fastest

Car production was down 4.9% in the period, marking the biggest decline since the first quarter of 2009.

Total production output slipped by 1.1%, the largest decline since the end of 2012. This included a 0.9% dip in manufacturing.

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Construction was also lower, dropping 0.3% in the fourth quarter. This follows two consecutive quarters of growth during the summer, when companies caught up with work delayed by adverse weather early in the year.

Although services output was up, growth slowed to 0.4% following a relatively strong performance during the summer.

The ONS said it reflected a slowdown across a number of industries, as Brexit-related concerns weighed on business-to-business spending at the end of 2018.

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Hargreaves Lansdown senior economist Ben Brettell said: "There’s little doubt Brexit uncertainty is responsible for the disappointing numbers, though concerns over global trade will also have played a part."

Compared with the same quarter in 2017, the UK economy is estimated to have grown by 1.3% -  the weakest in six years.

On a month-to-month basis, GDP fell 0.4% in December - the biggest monthly drop since March 2016.

The ONS also revealed today that Britain's trade deficit got bigger in the last three months of the year by £900million to £10.4billion too, thanks to a rise in goods imports including cars and chemicals.

Related: How the British pound has changed over time (Lovemoney)

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