UK GDP data - PwC comments

Feb 11, 2019

John Hawksworth, chief economist at PwC, comments on the latest GDP data:

"GDP showed an unexpectedly sharp fall of 0.4% in December as increasing Brexit-related uncertainty took its toll on all major sectors of the UK economy.

"While monthly GDP can be erratic, the quarterly growth rate also slowed markedly from 0.6% in Q3 2018 to just 0.2% in Q4. The services sector continued to grow, but manufacturing and construction both saw declines in output in the fourth quarter. Slower international growth, particularly in the Eurozone, added to Brexit-related effects to slow growth in the final quarter of 2018.

"Early signs from broader data are that growth remained very subdued in January. This suggests a possible further deceleration of growth in the first quarter of 2019 as businesses hold off on major investments until the fog of uncertainty over Brexit lifts. The housing market has also softened and there are signs that consumer spending has lost some momentum, despite the boost from higher real earnings growth and continued low unemployment rates.

"If the UK and the EU can agree a deal to ensure an orderly Brexit, then growth could pick up later in 2019 as business investment comes back on stream and positive real income growth supports consumer spending. But a 'no deal' Brexit make things very difficult and businesses would need to make appropriate contingency plans."


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