Philip Hammond blames Brexit 'uncertainty' as economic growth slows

Posted On: 
11th February 2019

Britain’s economy is being “overshadowed” by Brexit, Philip Hammond has warned, as official figures revealed that growth stalled at the end of 2018.

The Chancellor said the economy was 'being overshadowed by the uncertainty created by the Brexit process'.
Credit: 
PA

The Chancellor pointed to the latest figures from the Office for National Statistics which showed the economy growing by a lower-than-expected 0.2% in final three months of 2018 - down from 0.6% in the previous quarter.

The services sector meanwhile shrank by 0.2% in the last month of the year, with manufacturing taking a 0.7% hit and the construction sector shrinking by 0.3% month-to-month.

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Overall figures for 2018 showed that the British economy grew by just 1.4% over the year - the lowest annual rate of growth since 2012.

Mr Hammond warned MPs that ongoing indecision over Brexit was holding back British businesses.

He told Sky News: “It’s a solid performance from the economy when you took at what’s happening globally and in other competitor countries.

“But of course there is no doubt that our economy is being overshadowed by the uncertainty created by the Brexit process.

“The soon we can resolve that the better, and the quicker we can get back to more robust growth in the future.”

But the stalling growth was downplayed by Liam Fox, a leading Brexiteer in the Cabinet, who said those focused on the impact of Britain’s EU departure were “missing the point”.

He told reporters on a visit to Switzerland: "Clearly there are those who believe that Brexit is the only economic factor applying to the UK economy.

“I think you’ll find that the predicted slowdown in a number of European economies is not disconnected from the slowdown, for example, in China.

“The idea that Brexit is the only factor affecting the global economy is just to miss the point.”

'DEEP DAMAGE'

Anti-Brexit campaigners meanwhile pounced on the latest “bleak” statistics, which also revealed a 0.9% fall in business investment over the year.

Labour MP Anna Turley of the People’s Vote push for a second referendum said: “The Government simply cannot fulfil all the promises made during the referendum nor avoid deep and lasting damage to the economy.

“They cannot secure the ‘exact same benefits’ of being in the European Union, extra money for the NHS, the ‘easiest trade deal in history’ and control of immigration. These figures prove beyond any doubt that you cannot ‘have your cake and eat it’.”

Shadow Chancellor John McDonnell accused ministers of inflicting “real damage” on the British economy and urged Theresa May to rule out a no-deal Brexit.

The Labour frontbencher said: “The evidence is mounting that the combination of the Government’s shambolic handling of Brexit and nine years of austerity is causing real damage to our economy.

“Business investment has been falling for months now, as uncertainty and the fear of No Deal cause immediate damage to confidence.

“Six consecutive months of decline for the manufacturing sector hasn’t happened since 2009.

“The Government must act now to take No Deal off the table and Philip Hammond must use his Spring Statement to end the disastrous austerity policy which has done so much to damage the economy.”

Liberal Democrat leader Sir Vince Cable said Britain was now "fairly close to recession".

He warned: "These figures show how the closer we get to Brexit, the worse the impact is getting. Far from looking forward to a Brexit bonus we can expect a Brexit tax to deal with the fallout."

'FUNDAMENTALLY STRONG'

But Downing Street pointed to international figures to argue that Britain still enjoyed a "strong" economy.

The Prime Minister's spokesperson said: "The UK’s economy continues to grow and remains fundamentally strong.

"Growth of 1.4% in 2018 means the UK has grown every for the past nine years and the OBR [Office for Budget Responsibility] expects it to continue growing in every year of the forecast.

"The UK is currently enjoying the longest unbroken quarterly growth of any G7 nation and has outperformed the OBR forecast of 1.3% growth in 2018."