Britain’s economic system shrank for the primary time since 2012 within the second quarter, an unexpectedly extreme hangover from a pre-Brexit stockpiling enhance in early 2019 and boding poorly because the nation prepares to depart the European Union on Oct 31.
Gross home product (GDP) fell at a quarterly fee of 0.2 % within the three months to June, under all forecasts in a Reuters ballot of economists that had pointed to a flat studying. 12 months-on-year financial progress slid to 1.2pc from 1.8pc within the first quarter, Britain’s Workplace for Nationwide Statistics mentioned, its weakest because the begin of 2018.
Annual progress in June alone was the weakest since August 2013 at 1pc. With Prime Minister Boris Johnson’s authorities dedicated to leaving the EU on Oct 31, no matter whether or not he can safe a brand new transition deal to keep away from commerce disruption, the outlook for the rest of 2019 is very unsure.
The world economic system has additionally slowed due largely to a commerce battle between the US and China. The Financial institution of England final week predicted that progress will solely stage a restricted pick-up to a quarterly fee of 0.3pc throughout the present quarter and that progress for the 12 months as a complete will drop to 1.3pc.
Earlier information had already proven a collapse in manufacturing output in April as automotive producers introduced ahead their annual summer season shutdowns to observe the unique March 29 Brexit deadline that was postponed to Oct 31. However June manufacturing information was additionally unexpectedly poor and output for the quarter contracted on the quickest fee since early 2009, when Britain was mired in recession.
“Manufacturing output fell again after a powerful begin to the 12 months, with manufacturing introduced ahead forward of the UK’s unique departure date from the EU,” ONS statistician Rob Kent Smith mentioned.
Personal-sector enterprise surveys have proven the manufacturing and building sectors each contracted in July, whereas the bigger companies sector eked out solely modest progress.
Britain’s economic system has slowed since June 2016’s vote to depart the EU, with annual progress charges dropping from greater than 2pc earlier than the referendum to broaden by 1.4pc final 12 months. Friday’s information confirmed enterprise funding contracted 0.5pc within the second quarter of the 12 months versus economists’ expectations of a 0.3pc fall.
Family spending, which has been far more resilient than enterprise funding, attributable to falling unemployment and rising wages, rose 0.5pc on the quarter. Commerce figures and its contribution to GDP have been distorted erratic flows of non-monetary gold and in addition confirmed the impact of companies build up fewer shares than within the first quarter of the 12 months once they have been readying for Brexit.