ONS latest: Brexit uncertainty blamed for driving down investment by companies
BREXIT uncertainty and the impact of the Beast from the East are among the reasons why investment by companies fell by 0.7 percent in the second quarter of 2018, new figures released by the Office for National Statistics today have suggested.
The ONS published its GDP quarterly national accounts for April to June, suggesting overall GDP growth rose by 0.4 percent during this period.
However, its estimate for growth in the preceding quarter was reduced from 0.2 to 0.1 percent.
Overall GDP growth was judged by the ONS to have been 0.4 per cent in the second quarter.
But its estimate for growth in the first quarter was cut from 0.2 per cent to 0.1 per cent.
The agency said this was as a result of a more accurate view of the performance of the construction sector based on VAT receipts.
Builders were badly buffeted by the heavy snowstorms which swept across the country in February and March.
Additionally, the annual GDP rate for the second quarter is marginally down, from 1.3 to 1.2 percent.
The result makes the first half of the year the weakest period since the second half of 2011.
The latest business investment data shows growth weakening for the fourth quarter in a row
Rob Kent-Smith of the ONS said: “Although it has picked up a little from a slow start to the year, underlying economic growth remains persistently below the long-term average.”
“The latest business investment data shows growth weakening for the fourth quarter in a row.”
ONS figures indicate construction output dropped by 1.7 per cent in the first quarter, before bouncing back up by 0.8 per cent in the second quarter.
Manufacturing output fell by 0.7 per cent in the second quarter, after falling 0.1 percent in the previous quarter.
But services growth is judged to have increased to 0.6 per cent from 0.3 per cent.
The report judges the UK current account deficit widening to 3.9 per cent in the second quarter, with export values falling by 0.1 per cent and imports growing by 1.6 per cent.
GDP per capita increased by 0.2 per cent in the second quarter, after falling 0.1 per cent in the first.
There was a slight increase in the aggregate saving ratio of the household sector at 3.9 per cent, but this remains still close to a record low.
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In August, the Bank of England in August predicted GDP growth of 1.4 per cent in 2018, a 0.3 percent drop on last year.
It is predicting this figure will increase to 1.8 per cent next year, although this assessment is dependent on a “smooth” Brexit.
Bank of England Governor Mark Carney has said investment could pick up again if progress is made on negotiating a withdrawal deal with the EU.
Speaking in May, he suggested firms could be willing to resurrect spending plans if they received sufficient assurances about the future.