The GDP growth rate matched the low recorded in 2012 – when the economy was at its most stagnant since it was recovering from the financial crash in 2009, according to the Office for National Statistics (ONS).
Quarter-by-quarter GDP grew by just 0.2%, a significant drop from Q3 when it increased by 0.6%. It was slightly more positive than Q1 of 2018, which saw 0.1% growth. The early contraction last year, however, was due in part to extreme cold weather.
The services sector grew by 1.7% on an annual basis, but this represented its lowest rate since 2011.
Annual growth for construction was also at its lowest rate since 2012, measuring 0.6%, while the production sector sat at 0.7% – its lowest since 2013.
Quarter-by-quarter services increased 0.35%, while construction and production both contracted on this basis.
EY economists said it was “disappointing” that the economy ended the year on the “back foot”.
“We believe that there are the conditions in place for a pick-up in domestic demand if the UK ultimately leaves the EU in late March with some form of withdrawal deal,” said Howard Archer, chief economic advisor to the EY ITEM Club.
“However, it does now look challenging for the UK to achieve the growth of 1.5% in 2019 that we had been expecting with a Brexit “deal”.”
In the event of a no-deal Brexit the forecast is “markedly weaker in the near term at least,” according to Archer.
“Our best bet is that GDP growth would likely come in around 0.7% in 2019 and 0.6% in 2020, with the economy very possibly suffering stagnation or a mild recession over the second half of 2019,” he said.