Written by: Keith Tully
Published: 17th December 2019
The UK’s economy is growing at the slowest pace recorded in more than three years, according to a flash survey focussed on business activity taking place in December.
A sharp downturn in manufacturing output is believed to have been a particularly heavy drag on growth in recent weeks heading towards the end of the year.
According to IHS Markit and the Chartered Institute of Purchasing and Supply (CIPS), growth overall in the economy this month has been the weakest since the aftermath of the EU referendum in 2016, while manufacturing output is understood to have suffered its sharpest downturn since 2012.
“The economy contracted for the third time in the past four months,” commented Chris Williamson, chief business economist at IHS Markit.
“The latest decline was the second-largest recorded over the past decade, and increases the likelihood that the economy contracted slightly in the fourth quarter as Brexit-related uncertainty intensified in the lead up to the general election.”
The recent surveys are said to point towards a potential 0.2 per cent contraction in GDP in the final quarter of 2019 but the IHS Markit and CIPS data is not definitive on that and could yet be proven inaccurate.
Although manufacturers were found to have seen the sharpest declines in activity of any sector in recent weeks, the services sector also saw a slowdown in overall activity levels.
The figures for the services sector are often assessed particularly closely since businesses within the associated fields account for around 80 per cent of all activity within the UK economy.
IHS Markit’s latest numbers suggest the services sector is on course to suffer a second consecutive month of declining output for the first time since 2009.
According to Mr Williamson, there was an intensifying of uncertainties about what the future holds for businesses in the run up to the recent general election.
Hopes among businesses are that the victory of Boris Johnson and the Conservative Party in last week’s election will provide some extra clarity and certainty about the future.