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.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

See an opportunity to trade?

Go long or short on more than 16,000 markets with IG.

Spread bet and 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
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Bid
Offer
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

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 spread betting and CFDs.

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

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.