UK’s Q4 GDP up 0.6%, auto sector booms to 17-year high

The UK’s National Motor Museum in the south of England
Source: Jevgenija Pigozne/imageBROKER/REX/Shutterstock

LONDON (ICIS)–The UK’s GDP increased 0.6% in the fourth quarter as consumers dusted off political uncertainty, while the export-oriented automobile sector’s output hit a 17-year high, according to the Office for National Statistics (ONS) and the car makers’ trade group. 

The UK’s 0.6% GDP growth in the fourth quarter followed equal increases in the two preceding quarters, with the 2016 annual growth at 2%, said ONS, a slowdown from GDP growth of 2.2% in 2015 and 3.1% in 2014.

“Growth during quarter four was dominated by services, with a strong contribution from consumer-focused industries such as retail sales and travel agency services,” said the ONS.

“Following falls in quarter three (July to Sept) 2016, construction and production provided negligible positive contributions to GDP growth in quarter four 2016.”

However, the auto trade group Society of Motor Manufacturers and Traders (SMMT) warned the 1.72m/year production registered in 2016 had only been possible on the back of investments made over the past few years and “not a post-Brexit bounce.”

While UK consumers fended off the uncertainty following the EU membership referendum in June, in which voters decided to leave the EU’s tariff-free area where 56% of car exports are directed to (see graph), the SMMT gave a more sombre view of the uncertainty in the years ahead as investment already took a hit in 2016.

“Total committed investment announcements in the automotive sector in 2016 were approximately £1.66bn across a number of companies. This figure is down from £2.5bn in 2015,” said the SMMT.

The UK stood in 2015 as the fourth largest European automobile producer with 1.68m vehicles, after Germany (6.1m), Spain (2.7m) and France (2m), according to the European Automobiles Manufacturers Association (ACEA).

UK’s 2016 car production at 1.72m, of which 1.35m were exported to

Source: SMMT

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