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UK: Growth slowed to 0.2% in 4Q – ING

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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