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Car manufacturing puts the brakes on UK economic growth

by LLB Reporter
10th Jun 19 11:17 am

In the three months to April growth in the British economy slowed as a drop-in car production following the original Brexit 29 March deadline has hit output.

According to the Office for National Statistics (ONS), Gross Domestic Product (GDP) was up by 0.3% for the same period.

GDP contracted by 0.4% in April, on a month-to-month basis faster than the 0.1% decline expected by economists.

This decline was due to a drop-in car manufacturing as many car makers went ahead with their planned shutdowns.

Despite the production sector increasing by 0.7% during the three months to April, monthly growth slumped by 2.7%.

Rob Kent-Smith, the ONS’s head of GDP 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.”

Howard Archer, chief economic adviser at EY Item Club, said the latest figures indicates the economy is heading for a weak second quarter.

Archer said, “We had been expecting GDP growth to be no more than 0.2% quarter on quarter in the second quarter but even this muted performance is now looking somewhat optimistic, as it is hampered by some unwinding of the major stockbuilding that occurred in the first quarter amid concerns of a disruptive Brexit occurring at the end of March.

“Prolonged Brexit uncertainties, a fraught UK political situation and a challenging global economic environment are also weighing on economic activity in the second quarter.”

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