Britain's quarterly economic growth was confirmed at 0.2 percent in the three months to December 2018, below the previous three-month period's revised figure of 0.7 percent. Household consumption and government spending supported the expansion, while gross capital formation and net trade contributed negatively to GDP growth.
Household consumption growth eased to a year-low of 0.3 percent in the fourth quarter from 0.4 percent in the previous period. Spending on housing and household goods and services were the main drivers in the latest quarter. In addition, public spending rebounded firmly (1.3 percent vs -0.1 percent in Q3), with a significant contribution from increased defence spending.
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By contrast, gross fixed capital formation dropped 0.6 percent (vs 0.9 percent in Q3), as business investment contracted for the fourth consecutive quarter, the first such instance since 2009, driven mainly by declines in transport equipment as well as IT equipment and other machinery. Also, there was a £4.2 billion increase in inventories, including alignment adjustments and balancing adjustments. However, excluding these adjustments the estimates show a slight decrease of £1.2 billion in stocks being held by UK companies.
Net external demand contributed negatively to the GDP growth as the trade deficit widened to £6.9 billion from £6.1 billion in the previous period. Exports of goods and services rose 1.6 percent (vs 0.9 percent in Q3) and imports rose at a faster 2.1 percent (vs 0.7 percent in Q3).
From the production side, services output increased 0.5 percent, easing from 0.6 percent in the previous period, amid Brexit-related concerns. However, industrial production declined 0.8 percent (vs 0.6 percent in Q3), with a fall in output recorded across all four main areas of production, and construction output shrank 0.5 percent (vs 1.8 percent in Q3).
Year-on-year, the economy expanded 1.4 percent in the fourth quarter, compared to a preliminary estimate of 1.3 and the previous period's figure of 1.6 percent. Considering 2018 full year, the GDP grew 1.4 percent, slower than 1.8 percent in 2017.