Written by: Keith Tully
Published: 9th August 2019
The UK economy shrank by 0.2 per cent over the course of the three months between April and June this year, according to the latest data from the Office for National Statistics (ONS).
Uncertainty surrounding Brexit has been cited as a key source of problems within the economy in recent months, with the UK having been scheduled to leave the EU at the end of March.
The fall in GDP in the second quarter of the year represents the first decline in economic output in a three-month period since the final quarter of 2012.
“This is a challenging period across the global economy, with growth slowing in many countries,” said Sajid Javid, chancellor of the exchequer, in response to the latest figures.
“But the fundamentals of the British economy are strong – wages are growing, employment is at a record high and we’re forecast to grow faster than Germany, Italy and Japan this year.”
Uncertainty about what the future holds for the UK in terms of its relationship with EU countries is believed to have held back enterprise activity in a variety of sectors in recent months.
Car manufacturers have been particularly badly hit by Brexit uncertainty and a lot of other businesses invested time and money into making sure they were prepared for the UK’s departure from the EU earlier this year.
Producers within the economy saw their activity levels contract by as much as 1.4 per cent during the second quarter, according to the ONS.
Mr Javid has sought to offer some certainty to businesses by insisting that the UK will leave the EU at the end of October this year but a No Deal exit could also be bad news for companies and for the economy as a whole.
Concerns are now rising that Britain will officially fall into recession before long, as would be the case if GPD were to shrink again during the current quarter up to the end of September.
“Given the growing threat of a No Deal Brexit that looms menacingly overhead, it would not be at all surprising if the current quarter also shows a contraction – therefore meeting the standard definition of a recession with consecutive drops in quarterly GDP,” explained David Cheetham, chief market analyst at the trade brokerage firm XTB.
31st July 2020
The government has announced changes to its emergency business loans schemes to provide financial support to more small firms who might previously have been ineligible.Read More
30th July 2020
New laws being introduced this week mean anyone who loses their job having been furloughed by their employers is entitled to claim full redundancy payments.Read More