There was more bad news for the UK economy yesterday, as figures releases from the Office for National Statistics showed that GDP contracted by 0.4% in December 2018. Overall growth for 2018 was the weakest since 2012 and the worry is that with less than 50 days to go before Brexit, the situation will get worse before it gets better. The uncertainty looks set to continue with Theresa May’s rejection of Jeremy Corbyn’s customs union demands.
Industrial production decreased by 0.9% year-on-year in December, which was worse than the 0.4% decline the markets had expected. It is the fourth consecutive month of declines in industrial activity. Construction output shrank by 2.4% in the same period, which was well below the 1.5% gain expected, and is the first fall in construction activity since April 2018. Then manufacturing production figures showed a decline of 2.1% which was worse than the 1.1% fall predicted.
The trade deficit decreased to 0.32 billion in December, with imports declining by 1.6% to £55.85 billion, while exports fell at a slower rate of 1%. The pound weakened against the euro and dollar following the data release, as the markets become increasingly concerned about the economic effects of Brexit, ongoing trade wars and the global economy in general. Today is quiet in comparison, but on Wednesday we will see the inflation rate for January. It is expected to drop to 1.9% from 2.1% the previous period.