London (People’s Daily) -- Economic data released by the UK’s Office for National Statistics (ONS) showed economic growth was its slowest since 2012, mostly because of the uncertainty of the Brexit process and worries of a no-deal Brexit.
According to ONS, the growth rate in 2018 was 1.4 percent, down from 1.8 percent in 2017. Quarterly growth also fell to 0.2 percent in the three months to December, down from 0.6 percent in the previous quarter. The Bank of England warned that the UK might face an economic recession in 2019.
The car manufacturing slowdown was the biggest factor in holding back economic growth. ONS revealed that in the final quarter of 2018, car manufacturing declined at its steepest rate in just under a decade, slipping 4.9 percent. Many carmakers cancelled or postponed their production plans in the UK.
Earlier this month, Japanese car manufacturer Nissan cancelled its plans to produce X-Trail SUVs in the UK, a decision that shook the industry and politicians.
“While we have taken this decision for business reasons, the continued uncertainty around the UK's future relationship with the EU is not helping companies like ours to plan for the future,” said Nissan Europe chairman Gianluca de Ficchy.
On Wednesday, American carmaker Ford also warned that a no-deal Brexit might affect more than 7,000 jobs in its UK factories. It emphasized that a hard Brexit would be “catastrophic” for both the UK auto industry and its own production facilities.
Moreover, the UK’s trade will also suffer severely from a no-deal Brexit. As long as the UK stays in the EU, it enjoys access to around 40 European treaties covering trade with more than 70 countries.
In the event of a no-deal, the UK has to renegotiate or rewrite, known as “roll over” the existing trade deals with all those countries. However, the UK has rolled over with only seven of 69 countries covered by EU arrangements so far, according to the Guardian.
The UK signed a trade continuity agreement with Switzerland on Monday, which guarantees both countries’ businesses and consumers can still benefit from continued trade after the UK leaves the EU. Trade between the UK and Switzerland was worth £32.1 billion in 2017, but the UK has yet to sign agreements with several major trading partners, including Canada, Japan, South Korea and Turkey.
It is said that UK officials are considering tax cuts to encourage business investment after Brexit. Chancellor Philip Hammond has previously revealed a £15bn “war chest” to help boost the economy after the UK leaves. But the damage might be long-term. Economists predict that a disordered Brexit could cost the UK’s GDP growth 1.5 - 2.5 percent.