James Smith, developed markets economist at ING, points out that the UK growth slowed to just 0.2%, a stark contrast to the 0.6% reading seen during the third quarter as business investment fell for the fourth quarter in a row, with Brexit uncertainty continuing to bite.

Key Quotes

“Despite various surveys suggesting manufacturers are building up supplies of components and finished goods, we don’t think this will provide a meaningful boost to growth.”

“Stockpiling aside, the next few weeks are likely to see an increasing number of firms continuing to implement contingencies, which is unlikely to be growth-positive. While we still think 'no deal' will be avoided on March 29, most likely by Article 50 being extended, there is now a growing risk we won’t know for sure until the last minute.”

“This uncertainty appears to be slipping into the consumer mindset too, where confidence is now the lowest since 2013.”

“Putting all of this together, we agree with the Bank of England’s latest assessment that growth will stay around 0.2% during the first quarter. This says to us that a rate hike during the first half of the year looks very unlikely.”

 

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