UK economy loses momentum as Brexit deadline looms

Britain’s economic growth grinded to a near halt ahead at the end of 2018, with the UK’s services sector losing steam, its housing market slowing and consumer spending stalling.

London skyline Source: Bloomberg

Brexit uncertainty helped drag the UK economy to a near standstill at the end of 2018, with subdued growth conditions persisting across the British services sector, according to a recent IHS Markit survey.

The services industry plays a vital role in driving economic growth in the UK, but the sector has shown ‘worrying signs of having lost steam amid intensifying Brexit anxiety,’ Chief Business Economist at IHS Markit Chris Williamson said.

‘The final two months of 2018 saw the weakest back-to-back expansions of business activity since late-2012 and highlight how clarity on Brexit is needed urgently in order to prevent the economy sliding into contraction,’ Williamson added.

House price growth slows

Annual house price growth in the UK also slowed to its weakest pace since February 2013 in December, with prices falling 0.7% in the final month of the year, according to Nationwide’s house price index.

‘It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs,’ Chief Economist at Nationwide Robert Gardner said.

‘Near term prospects will be heavily dependent on how quickly this uncertainty lifts, but ultimately the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market,’ he added.

Consumer borrowing declines

The extra amount consumers have borrowed each month to buy goods and services has slowed in the second half of 2018.

Since July, the average monthly flow of consumer credit has been £0.9 billion, compared with £1.5 billion between January 2016 and June 2018, according to figures from the Bank of England.

In November, the total net flow was £0.9 billion, with net credit card borrowing of £0.4 billion, and borrowing for other loans and advances of £0.5 billion.

See an opportunity to trade?

Go long or short on more than 15,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.


IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Please see important Research Disclaimer.