Britain is growing faster than other major global economy

London tech

Britain’s economy stagnated in the final quarter of 2019 but over the course of the full year it grew faster than most other major economies.

Official figures show that GDP was flat in the three months to December as a slump in manufacturing offset small gains in the services sector. The reading was in line with economists’ expectations. In 2019 as a whole, the economy grew by 1.4 per cent, up from 1.3 per cent in 2018 and better than analysts’ forecasts.

Rob Kent-Smith, head of GDP at the ONS, said: “There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.”

The manufacturing sector, which has had a turbulent few years since the 2016 referendum, fell by 1.1 per cent in the third quarter. The sector has contracted for three consecutive quarters now. Business investment fell by 0.6 per cent, which was worse than economists’ forecasts of a 0.6 per cent fall.

Growth in the services sector slowed to 0.1 per cent, while construction output increased by 0.5 per cent.

Government consumption increased by 2.1 per cent in the fourth quarter, a notable pickup from the previous quarter and the strongest quarterly growth since the beginning of 2012. The increase reflects higher central government spending in public administration, defence services, health and education.

Household consumption increased by only 0.1 per cent at the end of last year.

Howard Archer, chief economic advisor to the EY Item Club, said: “2019 was a real yo-yo year for the economy, with its performance being particularly distorted by the two scheduled Brexit deadlines [March 28 and October 31].”

Political uncertainty knocked GDP throughout the year but more up-to-date business surveys suggest that the economy received a boost after December’s general election.

“All this backward-looking news is less important than the timelier data which suggest that the economy has returned to growth in quarter one,” said Ruth Gregory, senior UK economist at Capital Economics.

According to the ONS, growth picked up to 0.3 per cent in December. The annual 1.4 per cent growth rate meant that Britain was the third fastest growing economy in 2019, behind the US and Canada, which posted growth of 2.2 per cent and 1.5 per cent respectively.

Trade data published today showed that the deficit widened from £4 billion to £6.5 billion in the fourth quarter of the year as UK exports fell by £6 billion to £168.1 billion. This was partly offset by a drop in imports, from £2 billion to £174.6 billion.

In 2012 George Osborne set a £1 trillion-a-year exports target by the end of the decade as part of his “march of the makers” drive. The latest figures indicate that he missed the target by £311 billion. In 2011 exports of goods and services totalled £510 billion. Last year they were £689 billion.

The chancellor, Sajid Javid, said: “We’ve broken the deadlock and left the EU. Now we need to seize this moment to level up and prepare our great nation for long-term success.”