Zero growth in August as UK economy gives mixed signals
Liam Sheasby, News Editor
10 Oct 2018, 4:08 p.m.
The UK economy registered zero growth in August – below the predicted 0.1% growth rate and the lowest growth figure since the ‘Beast from the East’ hit the UK at the start of the year.
Figures from the Office for National Statistics reported no growth in GDP (Gross Domestic Product) but did note 0.7% growth in the three months up to August. Growth was slow in June at 0.2% but rose to 0.4% in July thanks to the hot weather and England’s performance at this year’s Football World Cup.
The news comes at the same time as the International Monetary Fund (IMF) releasing their latest international rankings of public finances. The UK is second-last in the table, only ahead of Portugal. The United Kingdom has £5 trillion in liabilities (debts, bank bailouts, pensions) but only £3 trillion in assets.
There’s little immediate impact of these findings, but their purpose is to highlight which economies are best or least prepared for a financial crisis, and the UK – especially in the face of Brexit – is seemingly unprepared.
If the UK registers zero or negative growth for a period of three months or more then the economy will officially be in recession, but the growth for the three-month period suggests there’s still faith in the British economy for now, despite the major impact on supply and demand that Brexit could have.
The scenario is best summarised by Jacob Dieppe, head of trading at Infinox, who told the FT Adviser: "Optimists will see the August flatline as mere seasonal fall-out, cynics will see it as symbolic of a deeper malaise. What few will deny is that the disproportionate contribution of the services sector leaves the UK very exposed in the event of a fractious Brexit.
"If consumers sit tight, the rate of growth could quickly contract, all the more so if the Pound weakens further and drives up inflation."