UK Economy Shrinks As Brexit Worries Grow

Quarterly GDP Data

Ms. May's replacement as prime minister, Boris Johnson, has insisted there will be no further delay to the Brexit date and that Britain will leave the European Union on Halloween come what may.

But the Chancellor, Sajid Javid, told Channel 4 News he wasn't expecting any such thing.

In this startling economic warning sign since 2016 Brexit referendum, GDP fell at a quarterly rate of 0.2%.

A sharp drop in the value of the pound against the euro should have started to hit exports from Ireland to the United Kingdom by making them more expensive and there have been warnings from companies as varied as Ryanair and Kerry Group that Brexit would take a toll.

Those factors caused total production - which included manufacturing - to dip by 1.4%.

ONS head of national accounts Rob Kent-Smith said the contraction followed "robust growth" in the first quarter and that manufacturing output fell off after a strong start in 2019.

"If it comes to no deal, it's not anything that I'm frightened of, I'm not anxious about, I think we will be ready for it, we will get through it, and we will come out stronger and even more resilient", Javid told Sky.

Listing the Brexit-related effects, the national statistics office cited problems such as the stockpiling of goods in the first quarter, along with shutdowns by carmakers.

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"And in fact, don't take my word for it".

In a world where trade is faltering, and where the global rates of production and consumption are falling, it is not surprising that the country leaving the biggest economic alliance is about to lose a lot of what it has managed to grow over the years. That's lower than what experts had expected (they had forecast growth to be flat).

He added: 'The reason we are seeing volatility in numbers - higher results in the first quarter, lower in the second quarter - the reason we're seeing this is because businesses are trying to work around Brexit and there's too much uncertainty.

"But the fundamentals of the British economy are strong".

"Time is of the essence".

"Underlying momentum remains lukewarm, choked by a combination of slower global growth and Brexit uncertainty", said Alpesh Paleja, lead economist at the Confederation of British Industry. "Unless the chancellor steps in imminently with radical action, we could be heading for a chaotic autumn - and a very long winter", said the FSB's policy and advocacy chairman, Martin McTague.

The finance minister-in-waiting for the opposition Labour Party, John McDonnell, said: "The Tories' Brexit bungling, including Boris Johnson now taking us toward no-deal, is breaking the economy".

The sector was also weighed down by a drop in transport equipment, which was 5.2% lower due to annual auto factory closures being brought forward from summer to April, as companies planned for possible Brexit disruption.

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