UK GDP growth flat in Q4 amid Brexit uncertainty

UK economy Brexit

Shoppers walk along Oxford Street in London Britain

Britain's service sector grew by merely 0.1 percent in the period (from October to December) and construction output grew 0.5 percent while production output fell 0.8 percent on a quarterly basis, said the ONS, adding that the fourth quarter witnessed an 1.1 percent increase year-on-year.

As Prime Minister Boris Johnson led the Conservative Party to win large majority in the parliament, monthly GDP increased by 0.3 percent in December, driven by growth in services.

The ONS said growth in the services and construction sectors was offset by a "poor showing from manufacturing, particularly the motor industry".

There was a slight rebound in December, as the economy grew 0.3% in the month of the elections, in which Christmas purchases were also made. But the 0.3% month-to-month rise in manufacturing output was minuscule, following a hefty 1.6% drop in November.

"That the economy pulled through arguably the most febrile political quarter in decades with flat growth will be seen by some as an achievement in itself".

"The underlying trade deficit widened, as exports of services fell, partially offset by a fall in goods imports", the analyst explained.

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

The pound edged higher against both the euro and dollar on the back of the figures as traders bet that the Bank of England now had even less incentive to cut interest rates. This was in line with expectations and an easing since strong growth in the middle of 2018. Many auto producers made a decision to shut down their factories for shorter periods earlier in the year.

Overall, the British economy grew by 1.4 per cent in 2019, just ahead of the previous year's rate of 1.3 per cent.

"This government must implement the measures that small businesses need to thrive: a free trade agreement favorable to businesses with the European Union and nations beyond, an immigration system that works for businesses of all sizes and the end of the impact debilitating late payments, which nearly doubled to £ 20 billion previous year".

Chancellor in the outgoing shadow of work, John McDonnell, said: & # 39; These are damning figures that show an economy going through a decade of decline.

Britain's finance minister, Sajid Javid, is expected to give the country's economy a boost with a spending increase in the government's first post-Brexit budget on March 11.

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