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Financial News: UK Business Investment Weakest Since 2008-2009 Amid Brexit

UK Business Investment Weakest Since 2008-2009 Amid Brexit Uncertainty

12/21/2018 - 08:52:00 (RTTNews)

(RTTNews) - British business investment fell for three consecutive quarters, marking its weakest period since the 2008-09 global financial crisis, as businesses reduced spending due to the Brexit chaos. Business investment decreased 1.1 percent sequentially in the third quarter, falling for a third consecutive quarter. Investment declined for such a long duration for the first time since the economic downturn of 2008-2009, the Office for National Statistics said. Britain's five leading business groups including the BCC and the CBI, on Wednesday, urged lawmakers to prevent a disorderly "no-deal" Brexit.

"Businesses of all sizes are reaching the point of no return, with many now putting in place contingency plans that are a significant drain of time and money," heads of the five groups said in a letter.

Elsewhere on Friday, figures from the Society of Motor Manufacturers and Traders (SMMT) showed that new car production decreased 19.6 percent year-on-year to 129,030 units in November amid weak demand, in particular for exports.

Separate data from the ONS showed that the third quarter economic growth was unrevised at 0.6 percent, which was the fastest since late 2016. Household consumption growth was also unrevised at 0.5 percent, driving the third quarter expansion as investment declined. However, the latest data from the ONS revealed that economic growth slowed in the three months to October, mainly due to a fall in car sales and stagnation in manufacturing.

The Bank of England warned on Thursday that Brexit uncertainties have "intensified considerably" and have started to hurt the financial markets and the near-term economic outlook.

Britain is preparing to leave the European Union on March 29, 2019.

Despite surviving a recent no-confidence motion triggered within the Conservative Party and delaying a crucial vote on a Brexit deal, Prime Minister Theresa May is yet to achieve a consensus among lawmakers regarding Britain's future relationship with the EU.

The central bank trimmed the growth projection for the fourth quarter of 2018 to 0.2 percent from 0.3 percent.

The ONS also reported that the UK current account deficit widened by GBP 6.6 billion to GBP 26.5 billion, or 4.9 percent of GDP, in the third quarter. That was the biggest deficit recorded since the third quarter of 2016, the agency said.

Worsening in all of the main components such as primary income, trade and secondary income balances contributed to the widening of the current account gap. Further, the ONS revealed that the public sector net borrowing excluding public sector banks was GBP 7.2 billion, which was the lowest borrowing figure for the month since 2004.

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