Real GDP growth remained stable in August (0% m/m) after a rebound in July (+0.4% m/m) driven by the summer pick-up in services and construction. Looking at the details in August, activity in services grew by a meager +0.1% m/m while it contracted in manufacturing (-0.2% m/m) and construction (-0.7% m/m). Taking into account the rise in uncertainty since August we expect a slight contraction in the September GDP which would bring Q3 GDP growth to +0.5% q/q after +0.4% in Q2. Going forward, we pencil in GDP growth of +0.2% q/q in Q4 supported by contingency stockpiling and moderate consumer spending. Company investment is expected to have been delayed by the rising Brexit-related uncertainty. However, while companies do not invest to increase production capacity, they seem to invest in digitalization: activity in ITC grew stronger than the whole services sector over the past year. A “last-minute” Brexit deal is expected by mid-January which should bring some temporary relief. Overall, we expect GDP growth to reach +1.3% in 2018 and +1.2% in 2019.
