British Economy At Weakest Point Since Financial Crisis As Brexit Uncertainty Grows

Growing uncertainty over Brexit has caused the British economy to slump to its weakest growth rate since 2012 in the aftermath of the global financial crisis.

The Office for National Statistics in England said the British economy grew by only 0.2% during the fourth quarter of 2018, down from 0.6% growth recorded in the previous three-month period. Output fell in the month of December by 0.4% from the month before.

For all of 2018, the British economy grew by 1.4%, its lowest increase since 2009, when it contracted by 4.2% in the wake of the global financial crisis. Last week, the Bank of England chopped its forecast for growth this year by 0.5 percentage points to 1.2%, which would be the weakest year for economic growth since the 2009 recession.

Statisticians did not directly blame Brexit for the current slowdown, but there is plenty of evidence showing that the uncertainties relating to the country's departure from the European Union are impacting economic activity, particularly business investment. Firms have no clear idea of what the country's trading relationship with the European Union will look like after the scheduled Brexit date of March 29.

The statistics agency said the slowdown in the last three months of 2018 was particularly "steep" in car manufacturing and steel production, offset by continued growth in the services sector, which makes up around 80% of the British economy. As Brexit day draws nearer, firms are getting edgy. There is no sign that the uncertainty, described as the "fog of Brexit" by the Bank of England, is going to lift anytime soon.

British Prime Minister Theresa May is struggling to salvage the Brexit deal she agreed on with the European Union late last year after it was overwhelmingly rejected by British lawmakers. She's trying to eke out concessions from the European Union, particularly on a controversial provision intended to make sure no hard border returns between Ireland and Northern Ireland, which is part of the United Kingdom.

It's unclear if the Prime Minister will be able to get any concessions, and fears have grown in recent weeks that Britain could crash out of the European Union without a deal, a worst-case scenario that the Bank of England has previously said could see the British economy shrink by 8% within months and house prices collapse by around a third.