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Growth drops down a gear as demand for cars stalls

Britain's economy dropped down a gear as it entered the autumn as weakening demand for cars put the brakes on sales and manufacturing in the motor industry, official figures show.

Gross domestic product (GDP) grew by 0.4% in the three months to October, down from 0.6% in the three months to September, according to the Office for National Statistics (ONS).

In October alone, GDP grew by just 0.1%, little improvement on a flat performance in September.

Rob Kent-Smith, ONS head of national accounts, said: "GDP growth slowed going into the autumn after a strong summer with a softening in service sector growth, mainly due to a fall in car sales."

The slowdown contrasts with a strong third quarter when hot weather helped boost consumer spending.

Growth in the dominant services sector - representing four-fifths of economic output - was 0.3% for the three months to October, its lowest since April.

It was dragged down by a decline in the motor trade - which has seen falling sales blamed on a squeeze in the supply chain caused by the introduction of new European emissions standards.

Meanwhile, the manufacturing sector was flat, dragged down by the impact of factory shutdowns which saw car manufacturing output fall 6.6% in October alone.

Jaguar Land Rover, Britain's biggest carmaker, ceased production for two weeks in October at its main car plant in Solihull to reflect "fluctuating demand".

Last week, a closely watched monthly survey for November pointed to economic growth of just 0.1% for the final quarter of the year.

Thomas Pugh, UK economist at Capital Economics, said there was "growing evidence that the impact of Brexit uncertainty on the economy is starting to intensify".

He added: "There is little chance of a rebound in growth over the rest of Q4.

"As a result, annual GDP growth will probably still come in at 1.3% this year, the weakest since the financial crisis."