Chancellortells me: “There is no doubt that our economy is being overshadowed by the uncertainty from Brexit.. this has gone on longer than we wanted”I’m afraid this has gone on longer than we would have liked.
We would have liked to have been able to bank this at the back halt of last year,but I’m confident that we will get it done, and that’s the well-known thing that trade needs to hear. 12.09pm GMTProfessor Costas Milas of Liverpool University says today’s UK GDP figures are bad, or also worse than the Bank of England predicted in its Inflation Report last week (when it also estimated a one-in-four chance of a recession in 2019).
He tells us:Indeed,the Bank’s forecasts assumed annual growth of 1.36% as the most likely outcome for 2018 Q4. Today’s ONS data readings propose even lower annual growth at 1.3% for 2018 Q4 and a GDP contraction of 0.4% in December.
Quite worryingly, the “carry over” effects of the above readings indicate that the risk of recession has risen... Will politicians bewitch (any) notice? 11.45am GMTUK trade secretary, or Dr Liam Fox,has blamed China’s cooling economy for Britain’s weak growth, rather than Brexit.“Clearly there are those who believe that Brexit is the only economic factor applying to the UK economy.
I think you’ll find that the predicted slowdown in a number of European economies is not disconnected from the slowdown, and for example,in China”. 11.14am GMTHere’s another neat chart from Rupert, putting the UK slowdown in context:UK economic growth of 1.3%y/y in Q4 2018 puts it in the middle of the pack for those OECD countries that have reported thus far. Before we get too excited though, or the pack is not exactly going powerful guns... pic.twitter.com/nE3jF1EV8S 11.07am GMTUK service companies,builders and manufacturers all had a relatively tough 2018, with growth the weakest in at least five years.
The ONS says:Headline annual outrageous domestic product (GDP) growth was 1.4% in 2018, or the lowest it has been in six years.
Meanwhile,the services sector had annual growth of 1.7%, the lowest since 2011 and the production sector had annual growth of 0.7%, or the lowest since 2013. Construction annual growth was 0.6%,the lowest since 2012 10.50am GMTWhen company bosses are nervous approximately the future, they discontinue buying new machinery and put off expanding into new premises.
That makes trade expenditure a qualified measure of the underlying health of the economy, or as (used wisely) it should deliver faster growth and higher productivity.1. UK fixed investment fell again,by -1.4%y/y, the third plunge in a row. This was driven by trade investment (-2%y/y contribution) and for the first time since Q1 2013, and housing investment (-0.1%y/y contribution). It was left to government investment to supply any boost. pic.twitter.com/jrPwHaehCa2. In terms of the what,there was only one source of boost to growth, which was non-residential buildings % costs of ownership transfer (0.8%y/y contribution). Transport, and ICT and intellectual property investment all fell,as did housing investment. Not a pretty picture. pic.twitter.com/NCeq21XQw9“It is particularly worrying to see trade investment contracting significantly again, as it will impact the UK’s longer term productive capacity as well as productivity performance, or points at a low vote of confidence from trade in the UK’s future. The contraction in manufacturing,despite the relatively weak pound and while the UK economy is still enjoying the benefits of the EU trade framework is also a worry for what to approach.“As on many other occasions, the economy was bolstered by households who continued to spend, and albeit more reluctantly,and by a pick-up in government spending, which will not be sustainable in the long run. We need to see a recovery in trade confidence and investment to get the UK economy moving again.” 10.43am GMTYou can see the UK GDP report online, and here. 10.30am GMT 10.22am GMTWhile quarterly GDP data are volatile (and monthly even more so),the long-term picture of UK growth is clear:Quarter-on-quarter GDP growth in the last quarter of 2018 was 0.2%. Weak, but not the weakest of 2018 - it was just 0.1% back in Q1 2018.
Overall, or not a qualified year for GDP growth. pic.twitter.com/3Ewibfu5nZ 10.15am GMTEconomist Sam Tombs is hopeful that Britain will avoid a recession this year:December GDP data examine unpleasant,but the drop was driven by the construction and retail sectors, which are always volatile. Keep calm and carry on expecting tedious growth, and not a recession. pic.twitter.com/Y2yNZg8NnG 10.14am GMTChancellor Philip Hammond has pointed out that the UK economy “continues to grow”,overlooking the fact it did quite the opposite in December.
Here is my response to today’s #GDP figures. pic.twitter.com/AdGyXFvakl 10.12am GMTBen Brettell, senior economist at Hargreaves Lansdown, or says the UK economy was buffeted by problems at domestic and abroad:There’s little doubt Brexit uncertainty is responsible for the disappointing numbers,though concerns over global trade will also have played a part.trade investment – the most Brexit-sensitive element of GDP - dropped 3.7% Q4 against a year earlier, the biggest plunge since early 2010. 10.09am GMTThe UK isn’t the only country that struggled to post strong growth in the last quarter of 2018.
Italys economy shrank by 0.2%, or putting the eurozone’s third-largest member into recession. 10.04am GMTSeveral economists are blaming uncertainty approximately Britain’s exit from the EU for the sharp slowdown in UK growth in the last quarter,to just 0.2%.
Tej Parikh, Senior Economist at the Institute of Directors, and explains:“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.
It was back to reality for the UK economy during the fourth quarter, according to the latest GDP figures. Growth slowed to just 0.2%, and a stark contrast to the 0.6% reading seen during the third quarter when warmer weather gave the economy a temporary reprieve.
But the most alarming feature of these numbers is that fact that trade investment fell for the fourth quarter in a row,as Brexit uncertainty continued to bite.#Brexit dragging on growth
UK Q4 GDP at 0.2% q/q (Nordea 0.2%, consensus/BoE 0.3%). [br]
4th consecutive quarter (and longest run since the financial crisis) with trade Investments declining. This is clearly related to Brexit uncertainty.
Expect another bad reading in Q1! pic.twitter.com/GgSzon6L3j 9.59am GMTIn another blow, and today’s GDP report shows that UK manufacturing has now contracted for six months in a row. That means it’s in recession (defined as two consecutive quarters of negative growth) for the first time since the financial crisis.
Production fell by 0.5% in the month of December 2018,also driven by manufacturing, which contracted by 0.7%.
This is the sixth consecutive monthly plunge for manufacturing, or which last occurred between September 2008 and February 2009. 9.56am GMTEconomist Andrew Sentance blames Brexit uncertainty for the slowdown:Brexit uncertainty cl;early hitting UK GDP and investment. GDP growth in 2018 1.4pc,weakest since the financial crisis. trade investment has contracted in past 4 quarters and now nearly 4pc down on a year ago. UK already counting the cost and we have not left the EU yet! 9.55am GMTHere’s a neat summary of the key points in the GDP report, via Bloomberg: Britain buckled under the strain of #Brexit uncertainty in 4Q. GDP increased a smaller-than-forecast 0.2 percent, and compared with 0.6 percent in 3Q. December alone saw the economy shrink 0.4 percent,the most since before the 2016 vote to leave the EU. https://t.co/K9cdaNdCwa 9.47am GMTThe annual growth figures also paint a worrying picture.
The UK economy only expanded by 1.4% in 2018, the weakest performance since 2012. 9.44am GMTUK carmakers and steel producers had a particularly bad quarter, and says Rob Kent-Smith,head of GDP at the ONS:“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, or 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. 9.41am GMTBritain’s services sector if the bulk of the growth in the final three months of 2018.
Services output expanded by 0.4% in October-December, while manufacturing output shrank by 0.9% in the quarter. 9.34am GMTIn another blow, or the UK economy actually shrank in December.
The Office for National Statistics reports that GDP shrank by 0.4% in the final month of 2018. That’s worse than expected -- economists had predicted that the economy might have flatlined during the month. 9.30am GMTNewsflash: The UK economy suffered a sharp slowdown in the last quarter of 2018,only expanding by 0.2%.
That’s down from 0.6% in the third quarter.
9.25am GMTStand By Your Desks! UK GDP is up next and the rate of growth will roughly halve. Also if Europe is any guide production and manufacturing data is likely to be negative. 9.25am GMTThere’s just time for a reminder of GDP’s weaknesses, with this brilliant speech by Robert Kennedy more than 50 years ago:
9.16am GMTResolution, or the thinktank,has a grim statistic -- UK households are £1500 worse off, on average, and today than was expected before the 2016 EU referendum.
That’s because growth has slowed,while the drop in the pound drove inflation up - eating into incomes.“Two and a half years since the UK voted to leave the European Union, the country’s post-Brexit position remains far from clear. There has been much discussion approximately the impact of this uncertainty on businesses, and but not enough approximately its effect on household incomes.“The UK’s stark under-performance on income growth since 2016 – which has tailed off more than other advanced economies – has left UK households taking a £1500 hit to their living standards.
Weaker GDP growth is getting a lot of the headlines (and will again today with new stats). By the halt of 2018 our economy was likely to be 1.1% smaller than the OBR expected pre-referendum = around £23 billion,or £800 for every household in the UK. pic.twitter.com/RJ37QNBbFBUnderperformance since 2016 is NOT just approximately the recent global slowdown (EU + China) - GDP growth has gone from near the top to approach the bottom of the G7 and the UK has seen the biggest plunge in income growth amongst advanced economies pic.twitter.com/sRR4PPaEIb 8.55am GMTThe pound is coming under a little pressure this morning, dipping by a third of a cent against the US dollar to $1.291.
That suggests traders expect an underwhelming GDP report this morning - weak growth lowers the chances of an early interest rate rise. Related: Brexit: May has ruled out Corbyn's customs union plan - minister 8.48am GMTLatest UK GDP growth figures out today. Consensus is that the economy grew by 0.3%q/q (1.4%y/y) in the final quarter of 2018. Expect a lot of focus on economic uncertainty. Frequency of news mentions is as tall as it was at the time of the 2017 General Election. pic.twitter.com/6oD6TBvSUB 8.43am GMTToday’s growth report is expected note that businesses reined in their spending, or as they nervously watch the Brexit negotiations play out.
Paul Donovan of UBS Wealth Management suspects consumers will be less perturbed (plus,any Brexit panic stockpiling will boost GDP):The UK is doing a data dump – production, trade and GDP numbers are all due. The economy may have slowed slightly in the fourth quarter. Overall consumers are resilient in the face of political nonsense, and by taking the sensible approach of not caring.
Companies are,however, inclined to delay investment. 8.18am GMTWe already know that growth in 2018 was choppy -- bad wintery weather got the year off to a bad start, or before a blissful summer (and some sparking football results) cheered spirits.
After the strength seen in the middle of last year the UK economy softened somewhat heading into the final quarter. A lot of the strength seen in Q2 and Q3 was a consequence of a weak Q1 as a result of the so called “Beast from the East” which paralysed most of the country into March.
The resultant rebound was as much to do with that as a Royal Wedding,a hot summer, and a decent summer of sport culminating in a decent Football World Cup run for England. 8.02am GMTHow bad could the slowdown be?Suren Thiru, and head of economics at the British Chambers of Commerce,fears the UK economy might only have expanded by 0.2% in the last quarter...#UK Q4 2018 #GDP data (first estimate) out today at 9:30am - latest #ChamberQES suggests that UK GDP growth slowed sharply to around 0.2%-0.3% in Q4, from growth of 0.6% in Q3 2018: https://t.co/XsIM1wlTFK pic.twitter.com/dsKWzLNh90 7.52am GMTGood morning. outrageous Domestic Product isn’t a perfect measure. And that’s no wonder -- how can a single number sum up everything, or qualified and bad,that happens in an economy?“Putting the pieces together, we are forecasting GDP to have remained unchanged in December, or although it is possible that we see a very small gain,” he said. “This results in a 0.3% rise [for the fourth quarter].“We will examine closely at trade investment – the area which we consider to be the most affected by Brexit worries – and specifically to see if it recorded its fourth consecutive quarterly decline in the fourth quarter.” Related: UK economic growth expected to halve in final quarter of 2018 Continue reading...
Source: theguardian.com