Britain’s economy slowed sharply in the fourth quarter of last year with growth of only 0.2 per cent as industrial production contracted and consumer spending showed signs of Brexit caution.
The Office for National Statistics also reported that the annual rate of growth in the fourth quarter slumped to 1.2 per cent, the lowest rate of expansion since 2012.
Economists and officials at the Bank of England expect the rate of growth to slow further in the first half of this year with the central bank last week putting the odds of the economy slipping into recession by the summer at one in four.
Sterling fell about 0.3 per cent to as low as $1.2899 against the dollar after the news.
Rob Kent-Smith, head of gross domestic product at the ONS, said: “GDP slowed in the last three months of the year with the manufacturing of cars and steel products seeing steep falls and construction also declining”.
When breaking down the results into sectors of the economy, both industrial production and construction contracted in the fourth quarter, while the larger service sector growth rate held up at 0.4 per cent.
In December alone, the whole economy shrank at a worrying pace of 0.4 per cent, but the ONS cautioned that these monthly indicators are volatile and can show significant variation from month to month.
When comparing expenditure, households were still the main contributors to the growth rate with their spending offset by falling investment and the contribution from trade as the prospect of Brexit took its toll on business confidence.