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UK Economy Slumps in April Following Sharp Decline in Car Production

Written by: Keith Tully

Published: 10th June 2019

Car Productions declineThe UK economy shrank by as much as 0.4 per cent during April of this year as compared to the previous month, according to the latest official data.

The sharpest ever fall in the number of cars being produced around the country is cited as a key reason why the economy struggled so much for growth in recent weeks.

Car makers across the country closed their factories during April in case there were major disruptions to their supply chains in the wake of the UK’s exit from the EU, which was scheduled to take place on March 29th.

In the event, Britain’s exit from the EU was delayed almost at the last minute but car manufacturers nonetheless were unable to make vehicles at anything close to the pace at which they usually do.

Car production is understood to have slowed by 24 per cent during April, which dragged heavily on the overall output of the manufacturing sector, which fell by 3.9 per cent in the month.

The rate of growth across the economy fell from 0.5 per cent in the first quarter of the year to 0.3 per cent in the three months to the end of April, according to the Office for National Statistics (ONS).

Experts have said that the figure of 0.5 per cent recorded for growth in the first quarter of the year was inflated in part by stockpiling activity that a considerable number of companies engaged in during the weeks leading up to March 29th when the UK was supposed to be leaving the EU.

Records relating to car production in the UK have been kept since 1995 and there has never been a month during which output declined more sharply than it did during April of this year.

The broader category of ‘transport equipment’ also contracted in terms of output at an exceptionally sharp pace and at a rate not seen since 1974.

ONS statistician Rob Kent-Smith said: “GDP growth showed some weakening across the latest three months with the economy shrinking in the month of April, mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.”

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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