The UK economy stagnated in October under the weight of yet more political uncertainty and a global slowdown, official figures showed this morning.
British GDP’s failure to grow was worse than the 0.1 per cent expansion economists had expected. It marked an improvement from the 0.1 per cent fall seen in September, however.
The economy also failed to grow in the three months to October, a timeframe which gives a more accurate picture of the economy. Production, including manufacturing, dropped by 0.7 per cent over this period, offsetting growth of 0.2 per cent in the services sector.
A spokesperson from the Office for National Statistics (ONS), which released the figures, said: “Construction also declined across the last three months with a notable drop in house building and infrastructure in October.”
The UK GDP reading was the last before the 12 December General Election that – according to current polling – is expected to result in a Conservative majority.
Should his party win, chancellor Sajid Javid will have to revive a slowing economy. Weak survey data from November showed that the services, manufacturing and construction sectors all shrank, boding badly for fourth-quarter growth.
Business investment has fallen in 2019 due to Brexit uncertainty. Prime Minister Boris Johnson has said leaving the European Union with a deal will get companies spending again, although the Bank of England and CBI have made less optimistic predictions.
The pound was trading close to eight month highs against the dollar this morning, however, up 0.17 per cent at around $1.316. Traders are hopeful that a Tory majority would bring some clarity to the economy, while they fear a radical Jeremy Corbyn-led Labour government.
John Hawksworth, chief economist at professional services firm PwC, said the GDP figures “showed a familiar pattern”.
The manufacturing sector’s recession continued as the country’s political crisis and a global economic slowdown hurt demand. The ONS said there were “widespread falls across several manufacturing industries” in the three months to October.
Hawksworth said: “Growth seems likely to remain subdued through the rest of 2019, but we would hope for a gradual revival in activity over the course of 2020 if current political and economic uncertainties ease.”
More to follow.