UK economic growth eased to 0.2% in the final quarter of 2018 as the clock ticked down to Brexit, official figures show.
The preliminary figure from the Office for National Statistics (ONS) represented a significant slowdown on the 0.6% achieved between July and September but was in line with economists’ forecasts.
It meant that, subject to revisions, the economy grew by 1.4% over the 12 months – its weakest performance since 2014.
The pound fell below $ 1.29 following the data release – a fall of almost half a cent – as investors digested the damage from Brexit uncertainty and the wider headwinds in the global economy linked to the US trade war with China.
Of the greatest concern will be a contraction for December alone of 0.4%.
The ONS said steep declines in the production of steel, new cars and in the construction sector drove the fourth quarter performance though household spending proved resilient – up 0.4% on the previous quarter and 1.9% on a year ago despite a tough Christmas for the high street.
Rob Kent-Smith, its head of GDP (gross domestic product), 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.
“Declines were seen across the economy in December, but single month data can be volatile meaning quarterly figures often give a better indication of the health of the economy.
“The UK’s trade deficit widened slightly in the last three months of the year, while business investment again declined, now for the fourth quarter in a row.”
The ONS measured car production 4.9% down between October and December – its biggest decline since the first quarter of 2009 as the industry battles Brexit uncertainty, weaker demand domestically and abroad and a crackdown on diesel.
Overall production output was 1.1% lower while construction dipped by 0.3%.
Tej Parikh, senior economist at the Institute of Directors, said: “The UK economy lost its summer exuberance in the final months of 2018, and there are signs of further chill winds ahead.
“The ongoing uncertainty around what happens after 29th March is the prime suspect behind sapped economic activity.
“There is currently a drag on growth as some businesses are forced to hold back on major investments and engage in cautionary stockpiling.
“The first half of 2019 will bring further challenges for the UK economy. China’s slowdown and weak growth in Europe are likely to bite at British exporters.
“At the same time, while consumers have shown resilience so far, many are becoming increasingly cautious with their wallets.
“The clock is ticking but if a Brexit deal can be agreed, things should start to look sunnier as pent-up demand is released and firms begin investing again.”
Neil Wilson, chief market analyst at Markets.com, said of the figures: “We must caution against blaming all on Brexit – global cooling is having the biggest dampening effect on all major economies at present – although we must note that business investment is collapsing (-1.4%, the fourth straight quarter of decline), and this has to be attributed to the current uncertainty.”