“Putting the pieces together, we are forecasting GDP to have remained unchanged in December, although it is possible that we see a very small gain,” he said. “This results in a 0.3% rise [for the fourth quarter].
“We will look closely at business investment – the area which we consider to be the most affected by Brexit worries – and specifically to see if it recorded its fourth consecutive quarterly decline in the fourth quarter.”
Last week, the Bank of England left interest rates on hold and said it expected UK growth in 2019 to be the slowest since the depths of the financial crisis a decade ago, blaming mounting Brexit uncertainty and the global slowdown.
Policymakers at Threadneedle Street sharply lowered their forecasts for growth in 2019 to 1.2% from a previous estimate of 1.7%. The forecast for 2020 was revised down to 1.5% from 1.7%.
Lower growth in the UK would follow a similar pattern in some of the eurozone’s biggest economies. Italy went into recession in the fourth quarter, and fears are mounting that Germany – Europe’s largest economy – might have suffered the same fate.
Average household incomes today are £1,500 lower than the Office for Budget Responsibility predicted in 2016, Resolution says in a report. That is the sharpest slowdown in income growth of any advanced economy.
Resolution’s report adds that while income growth across most advanced economies has underperformed in recent years, the UK has experienced the biggest slowdown of all, from 4.9% in 2015 to -0.1% in 2017.
“Had household incomes grown in line with other advanced economies they would have been £2,000 higher in 2017,” it said.
This cost of living squeeze has hurt Britain’s high streets too, where Oddbins, Patisserie Valerie, Greenwoods, Chapelle, Tr and HMV have all recently entered administration. Since Christmas Day, a total of 18,722 jobs at retail chains have either been cut, or put under threat, according to management consultancy Altus Group.
In slightly better news for consumers, data published on Wednesday is expected to show UK inflation slowed to a two-year low of 2% in January, from 2.1% in December, as the impact of Ofgem’s energy price cap fe through.
Inflation has steadily fallen over the past year, having risen sharply in the aftermath of the 2016 Brexit vote as the sharp drop in the value of the pound pushed up the price of goods and services imported from abroad. The headline annual rate peaked at 3.1% in November 2017.
However, the latest reports suggest that consumers are not in the mood to commit to big purchases, uncertain about what impact Brexit will have on the economy and their personal finances. UK house prices fell 2.9% in January, according to the mortgage lender Halifax as Brexit fears put off buyers; new car sales fell 1.6% in the same month.