UK business investment suffers biggest fall in three years as Brexit uncertainty bites, official figures show

The 1.1 per cent decline confirms the picture of firms cancelling or postponing investment due to Brexit uncertainty

Business investment fell by 1.1 per cent in the three months to September, the largest fall since early 2016, official data showed on Friday.

The decline confirms the picture of firms cancelling or postponing investment due to Brexit uncertainty.

It is also the third successive quarter of contraction, the worst run since the financial crisis a decade ago.

“This undoubtedly reflected heightened Brexit uncertainties,” said Howard Archer of the EY Item Club.

The Office for National Statistics’ estimate of overall GDP growth in the third quarter was unrevised at 0.6 per cent.

But more recent data and surveys point to a severe slowdown in the final quarter of 2018, with output growth possibly slowing to just 0.1 per cent.

The latest GfK consumer confidence survey, also released on Friday, showed the index dipping to a five-year low.

Worst since Q1 2016

Household spending growth in the third quarter was 0.5 per cent, unchanged from the second quarter, said the ONS.

But households reduced their aggregate saving rate to 3.8 per cent, down from 4.1 per cent previously, raising questions about the sustainability of this as a driver of growth.

The contribution of net trade to GDP growth was revised down to just 0.1 percentage points, from an 0.8 percentage point boost previously, reflecting weaker exports relative to imports.

Separately, the agency estimated that the current account deficit in the third quarter – the gap between what the country as a whole spends and receives in income – was £26.5bn, up from £20bn in the second quarter and the biggest shortfall in two years.

As a share of GDP that was equivalent to 4.9 per cent, up from 3.8 per cent previously.

The ONS also reported that public sector net borrowing in November was £7.2bn.

October’s borrowing was also revised down to £6.4bn from a previous estimate of £8.8bn, giving the Chancellor, Philip Hammond, a small measure of relief.