UK economy grinds to halt in August

UK economy grinds to halt in August

London (AFP) – Britain’s Brexit-facing economy ground to a shuddering halt in August, hit by weaker hotel and restaurant activity, official data showed Wednesday.

Six months before Britain is due to leave the European Union, gross domestic product (GDP) registered zero growth, the Office for National Statistics said in a statement.

That followed an upwardly-revised 0.4-percent expansion in July, which was boosted by sunny weather and the World Cup football tournament.

The ONS added that the 2018 summer heatwave provided a welcome lift to the economy, after it had suffered under unusually cold weather earlier in the year.

The August GDP print however undershot analysts’ consensus forecasts for anaemic growth of 0.1 percent.

Meanwhile, the economy grew 0.7 percent in the three months to August compared with the previous three months. That outpaced market expectations of 0.6 percent.

“The economy continued to rebound strongly after a weak spring, with retail, food and drink production and housebuilding all performing particularly well during the hot summer months,” said Rob Kent-Smith, ONS head of GDP.

“However, long-term growth continues to lag behind its historical trend.”

Howard Archer, chief economic advisor to the EY ITEM Club, forecast that growth would rebound in the third quarter of this year, or three months to September.

However, he cautioned that Brexit uncertainty would likely spark another slowdown towards the end of the year.

“We think there is a very real risk that growth will slow markedly in the fourth quarter due to appreciable Brexit and political uncertainties weighing down on business investment and also limiting client willingness to place major contracts,” he noted.

Britain will depart from the European Union at the end of March 2019.


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