News

News | Published June 10 2019

Car production falls, causing contraction of UK economy

The UK economy has contracted because of a “dramatic” fall in car production, according to ONS figures.

The ONS reported on Monday that gross domestic product fell 0.4 per cent from the previous month, after easing by 0.1 percent in March.

Despite this, the prime minister's official spokesman said: "While monthly figures are always changeable, the fundamentals of our economy are strong and it has grown every year since 2010," adding, "employment levels are at a record high and wages are growing in real terms."

A chief statistician at the ONS 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.

"There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK's original EU departure date has faded."

Yale Selfin, chief economist at KPMG UK, said: “The hangover that’s followed the UK’s original exit date is proving stronger than anticipated."

He warned that the drop in GDP will continue as Britain heads towards a no-deal Brexit.

Ruth Gregory, senior UK economist at Capital Economics, said: "With the Brexit paralysis and a slowing global economy taking its toll, we doubt GDP will grow by much more than 1.5 per cent or so in 2019 as a whole and expect interest rates to remain on hold until the middle of next year,"

The SMMT has predicted that a no-deal Brexit in October will worsen figures, with further setbacks caused by border delays, production stoppages and additional costs.


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Authored by

Lola Johnson
Contributor
@theparlreview
June 10 2019

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