UK economic growth slows in the third quarter
The UK’s trade deficit also widened as UK consumers bought more from abroad than we exported.
The notable weak spot was car sales, with new emissions tests and a reluctance among consumers to spend on expensive items in the run-up to Brexit took a toll.
The manufacturing sector was also weak, in spite of the decline in Sterling. This was offset to some extent by expansion in professional services, especially IT and accounting. The Office for National Statistics (ONS) said that Brexit was having an effect, but no more than in the previous two and a half years since the Referendum.
The latest quarterly figures follow stronger-than-expected data over the summer, buoyed by the Royal Wedding and the warm weather.
The prospects for 2019 depend on the outlook for Brexit, says Keith Wade, chief economist & strategist at Schroders: “Assuming Brexit goes smoothly, the UK should see an improvement in growth in 2019; we forecast GDP growth of 1.4%.”
In the meantime, the continued weakness of the UK economy in the face of Brexit is keeping investors away from the UK economy. Rebecca O’Keeffe, head of investment, interactive investor, said: “The continued Brexit saga has seen investors actively ignoring the UK market, instead preferring to look more globally. That said, on a relative valuation basis, UK equities are inexpensive, so those who are more optimistic about Brexit prospects, or simply see value here are beginning to look at the UK as a potential opportunity.
“However, in November, the UK market did nothing to help restore its reputation. Here investors were faced with an apparent choice between a bad and a catastrophic Brexit. It is no surprise, then, for the market to have spent much of November speculating as to which UK-focused companies would be most vulnerable to the increasingly vicious withdrawal of liquidity affecting the UK credit market. Extrapolating these trends may be the reason that Bank of England governor Carney is so worried about the potentially disastrous effects of a hard Brexit on the UK economy.”