UK economy slowed in October, official data shows

Growth slowed to 0.4 per cent in the three months to October and confirms the impression of a weakening economy ahead of Brexit next year

Ben Chu
Economics Editor
Monday 10 December 2018 10:44
No-deal Brexit will mean 'lost jobs, lower wages and higher inflation' warns Bank of England governor Mark Carney

The pace of UK economic growth slowed to 0.4 per cent in the three months to October, the Office for National Statistics said on Monday.

That was down from the 0.6 per cent rate in the third quarter of the year, and confirms the impression of a weakening economy ahead of Brexit next year.

“GDP growth slowed going into the autumn after a strong summer, with a softening in services sector growth mainly due to a fall in car sales,” said Rob Kent-Smith of the ONS.

The services quarterly growth rate slowed to 0.3 per cent, down from a peak of 0.7 per cent in July.

Manufacturing plunged by 0.9 per cent in the month of October, driven by a drop in output from the pharmaceuticals sector, which is often erratic.

Construction output fell by 0.2 per cent over the same period.

Total month-on-month GDP growth in October was 0.1 per cent, following zero growth in August and September

Business surveys released last week indicating the quarterly pace of expansion of the UK economy slipping to just 0.1 per cent in the final quarter of the year, with a risk of an outright decline. Many firms cited Brexit uncertainty as a factor constraining investment and orders.

Slowing growth

“The marked weakening of the UK economy this autumn is as we expected given the continued high level of uncertainty around Brexit,” said John Hawksworth of PwC.

“Until this is resolved, the UK economy is likely to remain in the doldrums as businesses will be reluctant to invest and households may also be reluctant to commit to big ticket items like house and car purchases.”

Separately, the ONS also reported on Monday that the UK’s goods trade balance in October widened to £11.87bn, higher than expected by City analysts.

There was also a sharp downward revision to exports earlier in the year.

"This year’s trade boost has been suddenly revised away, reinstating this depreciation’s record as the least successful in Britain’s post-war history," said Samuel Tombs of Pantheon.

In the three months to October the deficit was £35.5bn. Good exports were up by 2.1 per cent over the three months, but this was outstripped by the increase in imports, which were 3 per cent higher.

Including the services surplus, the total trade deficit was £3.3bn in October and £10.3bn over the quarter.

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