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.
The UK economy has grown at its quickest rate for nearly two years in the third quarter (Q3) of 2018, according to the Office of National Statistics (ONS).
Gross domestic product (GDP) growth in the UK in Q3 stood at 0.6%, representing the fastest the economy has expanded since the fourth quarter of 2016, the ONS said.
However, the economy was boosted by the summer heatwave and a strong performance by England in the FIFA World Cup, which drove consumer spending.
In August and September GDP growth remained flat, with significant signs of weakness in retail sales and car purchases.
Car production slows as demand weakens
The longer-term weakness in car production in part reflects softer growth in domestic demand, at a time when household real incomes have been squeezed, the ONS said.
The weakness in car production is broadly consistent with the latest data from the Society of Motor Manufacturers and Traders (SMMT), which noted a 16.8% fall in UK car manufacturing in September 2018 compared with the same period in 2017.
The SMMT attributed the slowdown to a ‘turbulent first three quarters as global trade tensions, model changes and uncertainty over diesel and Brexit were exacerbated by testing backlogs due to new emissions regulations’.
Thresa May continues to struggle in her attempts to secure a Brexit deal for Britain, which has led to companies pulling back on investment due to uncertainty.
The uncertainty appears to be deepening recently, with the latest Bank of England’s (BoE) November Inflation Report noting that Brexit and associated uncertainty ‘may have weighed on investment by more than had been expected in August’.
‘The economy saw a strong summer, although longer term economic growth remained subdued,’ Head of National Accounts at the ONS Rob Kent-Smith said.