Brexit’s toll: UK economy weakest since financial crisis

LONDON (AP) — Britain’s economy slowed last year to its weakest growth rate since the global financial crisis as mounting uncertainty over Brexit weighed on businesses and kept a lid on their investments, official figures showed today.

The Office for National Statistics said that the British economy grew by a quarterly rate of only 0.2 percent during the fourth quarter, down from the 0.6 percent tick recorded in the previous three-month period. Output actually fell in the month of December, by 0.4 percent from November, though monthly data are known to be volatile.

For 2018 as a whole, the economy grew by 1.4 percent, its lowest rate since 2009, when it contracted by 4.2 percent in the wake of the global financial crisis that had brought much of the world’s banking system to its knees.

Britain’s economy was likely hurt by global trends, such as trade tensions between the U.S. and China that have weighed on world growth. And many trading partners in Europe, such as Germany and Italy, have suffered a slowdown.

But there is plenty of evidence that uncertainty around to the country’s departure from the European Union was the main factor weighing on the economy, particularly on business investment.

In the fourth quarter, business investment fell by 1.4 percent for the fourth straight quarterly decline — the first time that has happened since the financial crisis.

With less than 50 days to go to Brexit day on March 29, firms have no idea what the country’s new trading relationship with the EU will look like, so they’re taking a safety-first approach.

The statistics agency’s head of GDP figures, Rob Kent-Smith, said the slowdown in the last three months of the year was particularly “steep” in car manufacturing and steel production, offset by continued growth in the services sector, which makes up around 80 percent of the British economy

Though Britain’s Treasury chief Philip Hammond argued that the British economy remains “fundamentally strong” and is “enjoying the longest unbroken quarterly growth streak” among the Group of Seven industrialized countries, he conceded Brexit unease was taking its toll.

“There is no doubt that our economy is being overshadowed by the uncertainty created by the Brexit process,” he told Sky News. “I’m afraid this has gone on longer than we would have liked.”

While the British economy largely held up better than expected in the immediate aftermath of the June 2016 vote to leave the European Union, firms are getting edgier as Brexit day draws nearer — the government had expected to be ratifying a withdrawal agreement with the EU by now.

There is no sign that the uncertainty, described as the “fog of Brexit” by the Bank of England, is going to lift anytime soon, so the economy is not expected to have improved at the start of this year.