The economy of UK has been growing at a slow annual rate which is lesser than growth rate of past six years after a strong shortfall during December 2018. According to figures of the Office of National Statistics growth has fallen from 1.8 % in 2017 to 1.4 % which represents slowest growth since 2012 which is largely due to reduction in factory output and automobile production. The economic forecast of ONS has been slow largely due to uncertainty over Brexit and weak global but Chancellor Philip Hammond stated that the data shows that UK’s economy is fundamentally strong and there does not seem to be any threat of recession.
The news of ONS about slowdown in economy led to fall in the pound to below $1.29 as Head of GDP at ONS stated that this was largely due to slowdown in manufacturing and automobile sector followed by decline in construction sector. But he assured that services sector is growing well with IT, health sector and management services contributing significantly to the economy. Though experts had estimated a slowdown they did not expect it to be so swift and ONS figures show that GDP has fallen by 0.4 % during December.
This was due to slight reduction in services sector related to restaurants and retail businesses which fell by 0.2 % month on month and this is the first time since 2012 that all these sectors fell simultaneously with production and construction. During final quarter of 2018 car manufacturing industry declined at a steep rate of 4.9 % while construction sector fell by 0.3 % followed by decline in business investment by 1.4 %. The strong services sector continued to grow but its expansion rate slowed down to 0.4 % after a strong show in summer. Economists believe that the uncertainty about Brexit is largely to blame for this situation as businesses are holding back on large investments and engaging in stockpiling instead.