UK GDP Growth Drops To Weakest Level Since 2012 As Brexit Uncertainty Weighs

According to the Office for National Statistics (ONS), Q4 performance dragged annual GDP down to 1.4% in 2018, the lowest growth since 2012.

GDP fell 0.4% in December, having grown 0.2% in October and November, driven by a drop in construction, production and services output in the final month of the year.

In Q4 overall, the services sector expanded 0.4% while production and construction fell 1.1% and 0.3%, respectively.

Business investment contracted for the fourth consecutive quarter, falling 1.4% in the final three months of the year.

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Helal Miah, investment research analyst at The Share Centre, said the UK economy is clearly being hampered by Brexit uncertainty.

"The Brexit impasse is now really showing through onto UK economic activity levels," Miah said. "We feel that assurances over the political environment are needed sooner rather than later for businesses to release pent-up investment funds, but the next few weeks/months will probably continue to see the malaise lead to reduced economic activity."

Ben Brettell, senior economist at Hargreaves Lansdown, added there was "little doubt" Brexit uncertainty was impacting the numbers with markets pricing in just a 35% chance of a rate hike this year, "despite a tight labour market and strong wage growth".

At its latest Monetary Policy Committee (MPC) meeting on 7 February, the Bank of England cut UK growth forecasts to 1.2% this year, down from 1.7% predicted three months ago, the lowest since 2009 and the largest downgrade since the 2016 referendum, while 2020's growth forecast was slashed 0.2 percentage points to 1.5%.