Grim new official figures out yesterday revealed growth went into reverse in December as output declined by 0.2%.
All four major sectors – services, manufacturing, construction and agriculture – shrank, as worried companies sit on their money
With just 45 days to go until Brexit and still no deal in place, bosses are waiting to see what happens with EU talks before investing, analysts said.
Growth also slumped in the final three months of 2018, leaving the economy to expand by just 0.2%, with more grim figures for January expected.
The disappointing end to the year meant growth for 2018 was down to just 1.4%, its lowest since 2012.
The news heaps fresh pressure on Theresa May to cut a Brexit deal with the EU, ahead of her update to MPs today and the next crunch Commons vote on Thursday.
Despite businesses’ fears, the PM will plead with angry MPs for another two weeks to talk to Brussels in a bid to hammer out reassurances on the controversial Irish backstop.
Mr Hammond admitted: “Our economy is being overshadowed by uncertainty created by the Brexit process.
“The sooner we can resolve that, the quicker we can get back to more robust growth in the future.”
The PM’s official spokesman added: “The UK economy continues to grow and remains fundamentally strong”.
In another grim figure, it was also confirmed yesterday that business investment has now fallen for four quarters in a row, leaving it a jumbo 3.7% lower than a year ago.
Tej Parikh, senior economist at the Institute of Directors, said the continuing uncertainty around Brexit was the “prime suspect” behind weaker economic activity.
He added: “There is currently a drag on growth as some businesses are forced to hold back on major investments and engage in cautionary stockpiling”.
Ben Brettell, senior economist at Hargreaves Lansdown, said: “There’s little doubt Brexit uncertainty is responsible for the disappointing numbers, though concerns over global trade will also have played a part”.
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