UK economy flatlined ahead of election

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UK economic growth flat-lined at the end of 2019, as Brexit uncertainty, troubles in the motor industry, and the general election weighed on the economy.

The Office of National Statistics (ONS) on Tuesday said preliminary estimates suggest UK GDP grew by 0% in the fourth quarter when compared with the prior three months. The ONS also revised up third quarter growth to 0.5%, marking a particularly sharp quarter-on-quarter slowdown.

“There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry,” said Rob Kent-Smith, the ONS’s head of GDP.

Total business investment shrunk by 1% in the fourth quarter, which was worse than analysts had expected.

Economists said lingering uncertainty over Brexit and December’s general election likely weighed on activity.

Morgan Stanley said it expects UK growth to rebound in the first quarter of 2020.

“Soft data… point to a strong rebound at the start of 2020, and our 1Q20 growth forecast currently stands at 0.3%,” economists wrote in a note sent to clients ahead of Tuesday’s data.

“After a frustratingly stop-start year, the economy limped to the end of 2019 and avoided a contraction by the narrowest possible margin,” said Karim Yousfi, chief global strategist at Audacity Capital.

“By the lacklustre standards of the past few years, this is a passable GDP report.” 

See also  UK economy ends 2019 on back foot as Brexit turmoil takes it toll