UK GDP: economy stagnates as Brexit uncertainty hits growth - as it happened

Graeme Wearden

from Economics | The Guardian on 2019-12-10 17:08 (#4WB9X)

UK economy failed to grow over the August-October period, reports the Office for National Statistics in its latest growth report

Latest: No growth in October
Economy also stagnated over the last quarter
Services growth slows; factories and construction contract
Expert: Brexit uncertainty blights economy

Earlier:

It's UK GDP day

3.05pm GMT

Time for a recap

Britain's economy has been dragged back into stagnation by economic uncertainty.

2.44pm GMT

Trade war news: The Wall Street Journal is reporting that US and Chinese negotiators are preparing for the next tranche of tariffs, due on 15 December, to be delayed.

That would allow both sides more breathing room to work on the Phase One trade deal that has apparently been nearly finished for weeks.

U.S. and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs set to kick in on Dec. 15, according to officials on both sides, as they continue to haggle over how to get Beijing to commit to massive purchases of U.S. farm products President Trump is insisting on for a near-term deal.

In recent days, officials in both Beijing and Washington have signaled that Sunday is not the final date for reaching a so-called phase-one deal-even though that is the date President Trump has set for tariffs to increase on $165 billion of Chinese goods. That date could be extended, as has happened several times when the two sides thought they were on the verge of a deal. Those prior deals, though, never held and tariffs continued to mount.

WSJ "U.S. and Chinese trade negotiators are laying the groundwork for a delay of a fresh round of tariffs set to kick in on Dec. 15, according to officials on both sides, as they continue to haggle over how to get Beijing to commit to massive purchases of U.S. farm products .." https://t.co/J4yzTidSTN

U.S. stocks open slightly lower https://t.co/AUCRKE83Rv pic.twitter.com/1AwsR4Xnh7

2.24pm GMT

The economic picture looks a little brighter in Germany today.

The ZEW German Economic Sentiment index has hit a 21-month high, showing that investors in Europe's largest economy are more upbeat.

The #ZEW outlook for #Germany surges to its highest level in nearly two years on hopes of improvements in exports and private consumption. $EUR
European Editor @EricCulpLS reviews today's survey results here: https://t.co/ScIIfKf8Tw pic.twitter.com/uPPXzuh8rP

German ZEW expectations jumped in December, but the index is not very good at predicting actual GDP-growth. Current conditions index is much better at that; there was an improvement in December, but less pronounced #macrobond pic.twitter.com/cAeoYnE1R0

2.07pm GMT

Paul Dales of Capital Economics fears the UK economy is going nowhere in the current quarter, given today's weak GDP report.

He told clients:

The 0.2% m/m rise in services output shows that the largest part of the economy hasn't got much momentum and the 0.2% m/m gain in manufacturing output may not be repeated given the weak global backdrop.

What's more, this is despite the first real evidence that stockbuilding ahead of the old 31^st October Brexit deadline may have provided some support to the economy. Indeed, most of the sharp leap in the international trade deficit, from 1.9bn in September to 5.2bn in October <see here>, was due to businesses buying more components from overseas as imports rose by a strong 6.2% m/m

1.32pm GMT

The weak growth figures haven't caused much of a kerfuffle in the City.

The pound has hit a new seven-month high against the US dollar today, touching $1.3189, as investors continue to price in a Conservative election victory.

1.15pm GMT

Weak consumer confidence means Christmas puddings and tins of biscuits are languishing on UK shop shelves.....

12.12pm GMT

Here's my colleague Phillip Inman on the UK's stagnating economy:

Britain's economy stalled in the three months to October following steep falls in the manufacturing and construction industries, according to the last official economic data before voters head to the polls on Thursday.

The Office for National Statistics said its monthly assessment found that a broad swathe of the UK's industrial sectors struggled in the autumn months to leave GDP growth at zero.

11.56am GMT

The slowdown in the UK economy isn't deterring Wetherspoons from expanding.

"We are especially pleased that a large proportion of the investment will be in smaller towns and cities which have seen a decline in investment in recent years.

11.24am GMT

Geoff Tily of the TUC says today's GDP report shows "the economy is in trouble...after a decade of Tory cuts".

He writes:

The news that the economy has ground to a halt, comes on top of earlier information showing annual GDP growth at a ten-year low and the UK languishing at the very bottom of the rich country league table.

That's the legacy of a decade of Conservative cuts and mismanagement.

11.00am GMT

Here's some political reaction to the GDP figures, from Liberal Democrat Chuka Umunna:

BREAKING: Official economic stats just out..
ai No growth in GDP for three months to October
ai Production down
ai Manufacturing down
ai Construction down
ai Trade deficit up
a-i All under the Tories' watch - and before they take us out on "no deal" terms if they win.#StopBrexit https://t.co/bnMCXYzziz

10.41am GMT

Britain's trade in goods deficit has widened too -- as imports continue to grow faster than exports.

The goods deficit with the EU has widened by 3.5bn to 25.0bn in the last three months, while with non-EU countries it widened 3.3bn to 10.6bn.

Imports from non-EU countries rose by 5.3 billion to 61.0 billion in the three months to October 2019. This was largely driven by a 3.9 billion increase in unspecified goods (which includes non-monetary gold), and a 1.1 billion increase in machinery and transport equipment.

Imports from EU countries rose by 4.7 billion to 68.2 billion in the three months to October 2019. This was largely driven by machinery and transport equipment, and chemicals, which increased by 2.2 billion and 1.3 billion respectively.

10.31am GMT

Jack Leslie, Economic Analyst at the Resolution Foundation, says the next government must do more to boost growth:

"Crucially the UK's domestic challenges come against a weak global economic outlook for next year.

While the main parties have avoided any discussion of this challenging economic environment during the election campaign, navigating it will be a central task for the next government nonetheless."

10.24am GMT

While monthly GDP data can be volatile, the big picture is that the UK economy is growing at its weakest pace since the aftermath of the last recession.

Latest @ONS data on UK GDP were released this morning. The figures show that GDP growth has continued to slow. The economy only grew by 0.8 per cent over the past year - the slowest rate in almost eight years. pic.twitter.com/eTtGINAkb6

10.15am GMT

You can see the UK GDP report yourself, here.

Here are the key points:

10.14am GMT

Today's GDP report is the first since Britain officially avoided recession, by posting growth in the third quarter of 2019.

Debapratim De, UK economist at Deloitte, says Brexit worries are holding the economy back:

"Today's data suggest that the UK economy is struggling to gain momentum after avoiding a recession in the third quarter.

The sharp contraction in construction activity is a reminder that the global slowdown and Brexit uncertainties continue to blight UK growth."

10.11am GMT

Britain's builders have suffered a mensis horribilis.

Construction output slumped by 2.3% in October alone, a serious slide, which took output down to its lowest level since January 2018. That's partly due to drop in housebuilding and home repairs.

Rolling three-month growth in construction was negative 0.3% in the three months to October 2019. This fall was driven by private housing repair and maintenance, and private new housing, which fell by 3.6% and 1.0%, respectively.

The month-on-month growth in October was negative 2.3%. This decrease was driven by private new housing and infrastructure, which fell by 4.7% and 4.3%, respectively. The fall in infrastructure is as a result of several large businesses changing the timing of some of their regular activity from July to October.

10.04am GMT

John Hawksworth, chief economist at PwC, says Britain's economy is suffering from Brexit uncertainty - and the slowdown in the world economy.

"GDP was flat in both October alone and the three months to October, confirming a loss of momentum in the economy since the summer due to Brexit-related uncertainty and slower global growth.

The sectoral breakdown showed a familiar pattern, with services growth modestly positive in the three months to October but manufacturing output declining. Construction output also registered a particularly sharp drop in October as both infrastructure projects and housebuilding fell back.

10.00am GMT

NIESR, the economic think tank, says the UK economy is now suffering from falling investment -- which has been under pressure since the Brexit vote.

The latest data confirm that economic growth in the UK is petering out at the end of the year. GDP was flat in the 3months to October. The economy is being held back by weak #productivity growth and low #investment due to chronic levels of #uncertainty - More at 12.30pm https://t.co/0jQQwbn6YI

9.59am GMT

9.57am GMT

This chart from Economist Rupert Seggins shows how Britain's manufacturing, construction and 'admin and services' all contracted in the last three months:

UK GDP change of 0% q/q in the 3 months to October as per consensus expectation. Main boosts came from health, professional services, real estate, info & comms and wholesale & retail. Main drags from manufacturing, construction, accommodation & food and admin services. pic.twitter.com/zmcgo2qDIJ

Last reading on UK economic growth before the election, and it's not very encouraging. UK gross domestic product was flat in three months to October. Weak performance from manufacturing and construction sectors. Full numbers here: https://t.co/msy3Vu1d9z pic.twitter.com/raMoeCN7yf

Away from the hubbub, economy stagnates in 3 months to Oct, with service sector (esp. comms, IT, health, education) keeping overall activity from sagging as manufacturing, construction output shrinks

Fall in manufacturing output driven by fall in pharma, electrical equipment production - slackening after stockpiling of recent months?

Whatever the Brexit-deadline-related distortion, industry v much under pressure; output still over 6% down on pre-crisis peak

9.50am GMT

Today's GDP report shows the UK economy failed to grow in August, September or October.

9.47am GMT

The government once boasted about creating a March of the Makers.

Today's GDP report paints a different picture: output at UK manufacturers has been falling pretty steadily since the spring, as the boost from Brexit stockpiling has faded.

9.42am GMT

Growth across Britain's services sector, which makes up around three-quarters of the economy, has also stumbled.

The ONS says:

Growth in the services sector slowed in the three months to October 2019 to 0.2%, following growth of 0.4% in the three months to September 2019.

This growth was driven by strength in professional, scientific and technical activities, wholesale trade and health, and was partially offset by weakness in office administrative and support activities.

9.35am GMT

Britain's factories and builders have both suffered falling growth in the last quarter, today's report shows.

An ONS spokesperson said:

"The UK economy saw no growth in the latest three months. There were increases across the services sector, offset by falls in manufacturing with factories continuing the weak performance seen since April.

Construction also declined across the last three months with a notable drop in house building and infrastructure in October."

9.32am GMT

UK GDP Estimate (M/M) Oct: 0.0% (est 0.1% ; prev -0.1%)
UK GDP Estimate (3M/3M) Oct: 0.0% (est 0.0% ; prev 0.3%)

UK GDP Estimate (Y/Y) Oct: 0.7% (est 0.7% ; prev 0.9%)

9.32am GMT

BREAKING: The UK economy has stagnated in October, and also over the last quarter.

That's according to the latest monthly growth report from the Office for National Statistics. It shows that GDP was unchanged during October itself, and also in August-October compared to the previous three months.

9.26am GMT

It's nearly time for UK GDP...

UK GDP for the 3 months to October up next. Consensus is for 0%q/q. Likely to be lots of talk of uncertainty. News mentions of economic policy uncertainty tend to spike around election time (unsurprisingly). pic.twitter.com/YGsoBUzbby

9.04am GMT

Oof! Shares in fashion retailer Ted Baker are being hammered, down 35% at one stage this morning.

The City is alarmed by this morning sudden departure of both CEO Lindsay Page (a company veteran) and chairman David Bernstein. The news that pre-tax profits might dwindle to just 5m, from 50m last year, is another hefty blow.

Well, after yet another profit warning, it will cost a lot less to buy Ted Baker now and take it private, but Ray Kelvin could be forgiven for having second thoughts, given the mess the business is in.

8.54am GMT

The London stock market has started the day on the wrong foot, as investors await October's UK GDP report.

The blue-chip FTSE 100 index has shed 65 points, or 0.85%, in early trading to 7,173 - back towards last week's two-month lows.

8.44am GMT

With the UK's future as murky as the clouds blanketing the country, people appear to be delaying their Christmas preparations.

"Amid the uncertainty of a (Dec. 12) general election, a lacklustre Black Friday and a wet autumn, shoppers have been delaying their Christmas preparations and are waiting to stock up on festive supplies."

8.01am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today we get the final healthcheck on the UK economy before Thursday's election, and it may not cheer the spirits.

"Trading over November and the Black Friday period was below expectations, with lower than anticipated margins and sell through.

Wow. Struggling Ted Baker throws the kitchen sink at recovery: CEO is out after 22 years with company, chairman on his way too, divi suspended, profit warning. And there's still the internal fallout of #Huggate too...

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