Slowing investment and private consumption to weigh on UK's economic growth

UK's second Q4 15 GDP estimate came in unrevised at 0.5% q/q (1.9% y/y), in line with consensus expectation. Headline growth remains driven primarily by private consumption (0.7% q/q, +0.4pp contrib.). Government spending meanwhile surprised to the upside; it registered 0.5% q/q growth (+0.1pp contrib.), much stronger than expectations. 

Domestic demand remains the primary driver of UK economic growth, accounting for +0.8pp contribution; Imports printed 1.2% q/q while exports contracted for its second consecutive quarter, growing by -0.1% q/q, leading net trade to detract by more than anticipated -0.4pp. 

The contraction in Q4 15 investment, and the downwardly revised investment growth in Q3 15 (from 0.7% q/q to -0.1% q/q) suggests that investment started slowing. Firms to continue to be cautious regarding investment decisions in light of the EU referendum risk, could result in further reduced business investment in the run-up period.