GDP growth slowed down markedly to +0.2 q/q in Q4, below the +0.3% expected by consensus but in line with our expectations. Consumer spending proved resilient, albeit weak, growing by +0.4% q/q, unchanged from Q3. Public spending growth rebounded to +1.4% q/q. Business investment contracted for the fourth quarter in a row (-1.4% q/q) something that didn’t occur since 2009. Stocks contributed +0.5pp to growth, positive for the third consecutive quarter as companies accelerated contingency stockpiling. The main increases came from wholesale goods and manufacturing goods. This triggered a rebound in imports to +1.3% q/q. Hence, excl. stocks GDP contracted by -0.3% after 0% in Q3 and +0.1% in Q2. We expect Brexit-related uncertainty to cap growth to +0.2% q/q in Q1 2019 and to +1.2% annually. However, the more the uncertainty prevails the higher the downside risks. The UK Parliament vote on the Brexit deal has been delayed to 27 February. We continue to expect a last-minute agreement through (i) a Brexit deal ratification or (ii) an extension of Article 50 (read more here).
