The UK economy stalled in the final quarter of 2019, with no growth at all on the previous three months as political uncertainty gripped the country.
Gross domestic product (GDP) remained flat between October and the end of December, down from a rise of 0.5 per cent in the third quarter, the Office for National Statistics (ONS) said.
It means the economy grew 1.4 per cent across 2019, up slightly from the previous year but still one of the slowest rates of growth since the 2008 financial crisis.
There was a slight pick-up in December, the month of the general election, as the economy grew by 0.3 per cent to cancel out a dip in November.
Rob Kent-Smith, the ONS’s head of GDP, said: “There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.
“The underlying trade deficit widened, as exports of services fell, partially offset by a fall in import goods.”
The news sent the pound up by 0.2 per cent against both the euro and the dollar.
“Investors have reacted to the UK’s headline number and ignored the weakness in manufacturing production,” said Naeem Aslam, chief market analyst at Avatrade. “This moved the sterling higher against the dollar. But the weakness in industrial production is a concern.”
Ruth Gregory, senior UK economist at Capital Economics, said the fourth quarter GDP was “not quite as bad as we feared” and “the pickup in the surveys of activity and sentiment suggest Q1 [2020] will be much better”.
The ONS said GDP had been “particularly volatile” in 2019, partially because of the changing deadlines for the UK to leave the European Union. Brexit was originally scheduled for March 2019, but was later delayed to October, and then again to January this year.
The statisticians found evidence there had been stockpiling in the run-up to the October Brexit date, but this was not as pronounced as the March deadline.
Chancellor Sajid Javid said: “We’ve broken the deadlock and left the EU – now we need to seize this moment to level up and prepare our great nation for long-term success.
“In my Budget, exactly one month from today, I’ll set out how we will move forward, with more ambition and new thinking, and empower our people and businesses so everyone has the opportunity to thrive.”
Household expenditure grew by 0.1 per cent on the quarter before, the weakest figure since the fourth quarter of 2015, when spending dropped by 0.3 per cent.
Construction output grew by 0.5 per cent in the last quarter of 2019.
But the services sector, which provides many jobs in the UK, slowed to 0.1 per cent growth. This was in line with expectations and an easing since strong growth in the middle of 2018.
Manufacturing output declined sharply by 0.8 per cent in the fourth quarter as there was less demand for cars. Many car producers shut down their factories for longer summer holidays this year.
The Society of Motor Manufacturers and Traders (SMMT) recently released data showing a 6.4 per cent decline in car production in the final quarter of 2019, and a 14.2 per cent drop across the year as a whole.
Shadow chancellor John McDonnell said the stagnation in the last months of 2019 was “damning” and showed “showed an economy punctured by a decade of decline”.
“With production tumbling over 2019 at its worst rate since 2012, it is clear that the Tories’ combination of cruel cuts and economic mismanagement has sent the economy into freefall,” he added.
“The Tories lack any vision or plan for the economy, and the upcoming Budget risks another decade of disappointment.”
