SCC Network Business Round Up

UK GDP: Economic Commentary from SCC

Today’s data, published by the ONS, shows that the UK economy has either experienced a significant slowdown or decline in a number of areas in Q4 of 2018. SCC Network’s latest Quarterly Economic Indicator, published on 7th February 2019, also pointed towards a slowing economic climate in Scotland with investment intentions and business confidence dipping in key sectors. The manufacturing stats today reflect the weaker output from the manufacturing sector in the last quarter of 2018. Manufacturing growth fell at its sharpest level in just under a decade for the UK overall. SCC Network’s Scotland-specific economic data also showed business confidence within this sector was at its lowest level since 2012. It also showed a considerable decline in investment and profitability amidst rising concerns and cost pressures. This slowdown in the UK economy is likely to continue further into 2019 as we draw closer to Brexit, as each day brings business closer to a possible no-deal scenario. So, the need for clarity continues to grow. It is crucial that the UK Government endeavours to avoid a Brexit that harms business and the Scottish/UK economy following the 29th of March. The figures today illustrate the importance of political decision-makers needing to provide the business confidence and economic stimulation that the economy needs.

UK Economy: GDP Stats

  • The UK economy suffered a sharp slowdown in the last quarter of 2018, only expanding by 0.2%. That’s down from 0.6% in the third quarter.
  • In another blow, the UK economy actually shrank in December.
  • The Office for National Statistics reports that GDP fell by 0.4% in the final month of 2018. That’s worse than was initially expected — economists had predicted that the economy might have flatlined during December.

UK Economy: Annual growth hits six-year low

  • The UK economy only grew by 1.4% in 2018, the weakest performance since 2012.
  • Business investment dropped 3.7% in Q4 against a year earlier, the biggest fall since early 2010.
  • Consumer spending growth stayed at 0.4% in the fourth quarter, but business investment slumped 1.4%, the most since the start of 2016 and the fourth consecutive decline in investment.
  • Services, the largest part of economy, slowed to 0.4% growth.
  • In December, all the main sectors of the economy shrank, with manufacturing falling for a sixth consecutive month, the longest run of declines since the financial crisis. The fall in overall GDP was the largest since March 2016.
  • The trade deficit narrowed to £12.1bn in value terms in December.
  • GDP rose 1.3% in the fourth quarter from a year earlier, the weakest since the second quarter of 2012.

UK Economy: UK manufacturing in recession

  • Today’s GDP report shows that UK manufacturing has now contracted for six months in a row.
  • That means it’s in recession (defined as two consecutive quarters of negative growth) for the first time since the financial crisis.
  • Production fell by 0.5% in the month of December 2018, also driven by manufacturing, which contracted by 0.7%.
  • This is the sixth consecutive monthly fall for manufacturing, which last occurred between September 2008 and February 2009 at the height of the global financial crisis.

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