Economy guage?

I have what must be the first of the 18s nov 82 with the economy guage, but the little needle dosent seem to work (never seen it), but the yellow light does, is this a common fault and is it knackered?

This is usually caused by the switched on the top of the gearbox having failed/become disconnected, etc.
The switch tells the consumption meter when you are in fifth gear, and then the needle is used instead of the LED.
The switch can be replaced by a Golf Mk2 item, if you move the wires in your Mk1 multiplug connector to suit - do a search on this forum for more details