UK economy shrinks as recession fears grow
Sterling slumps as data shows GDP contracted for the first time since 2012
The UK economy shrank in the second quarter of the year by 0.2 per cent, the first time it has contracted in nearly seven years.
The news, which was worse than the Bank of England expected, sent the pound sliding against the Euro and US Dollar.
As uncertainty over the UK leaving the European Union continues to grow, there are fears of a recession if Gross Domestic Product continues to slump.
The data contrasted with the 0.5 per cent “robust” growth in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.
“Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure from the EU,” said Rob Kent-Smith head of GDP at the Office for National Statistics.
“The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all,” he added.
But finance minister Sajid Javid insisted “the fundamentals of the British economy are strong,” pointing to growing wages and employment.
“This is a challenging period across the global economy, with growth slowing in many countries,” he said.
New prime minister Boris Johnson has insisted the UK must leave the EU on October 31 – with or without a divorce agreement with Brussels. Critics fear a ‘hard’ break from the EU or no-deal Brexit could cause turmoil and savage the UK economy.
“The government is determined to provide certainty to people and businesses on Brexit – that’s why we are clear that the UK is leaving the EU on 31 October,” Mr Javid added.
The government's official forecaster last month warned that Britain would slide into a year-long recession should it leave the EU without a deal.
Updated: August 9, 2019 04:07 PM