United Kingdom economy shrinks by 0.4% in April, in biggest fall since 2016

Marco Green
June 11, 2019

It was the sharpest monthly decline for three years, driven by a steep fall in manufacturing.

According to the Office for National Statistics, gross domestic product (GDP) plunged by 0.4% in April from a month earlier as factories across the country launched a wave of planned shutdowns to avoid any disruption that could have been unleashed by a no-deal Brexit.

At 1.2%, growth in the manufacturing sector in the three months to April was weaker than expected, and significantly below the 2.2% seen in the first quarter, which benefitted from an intense period of Brexit-related stockpiling.

A "dramatic" fall in vehicle production and an easing of stockpiling by manufacturers meant the economy shrank in April, official figures show.

BMW shut its UK Mini and Rolls-Royce plants for all of April.

When Brexit was delayed, this stockpiling stopped.

It follows a decline of 0.1 per cent in March 2019.

While UK auto manufacturers have struggled amid faltering demand for exports from China and elsewhere overseas as the world economy slows, and from tighter restrictions on diesel engines, several firms said they would temporarily halt activity due to Brexit, while some said they would ultimately close factories altogether, with thousands of job losses.

In the event, Prime Minister Theresa May delayed departure with just days to go and subsequently set a new date of October 31 - but that was too late for businesses to change their plans.

"We had expecting GDP growth to be no more than 0.2 per cent quarter-on-quarter in the second quarter, but even this muted performance is now looking somewhat optimistic".

To add insult to injury, United Kingdom trade exports in April fell by 8.4% while imports collapsed by 12.7% in light of the biggest monthly fall in trade volumes for exports and imports since 2006 and 1998 respectively.

"I am quite clear that we [Britain] have to pay what is owed up to the date we leave, as a matter of law", said Ros Kellaway, head of the Competition, EU and Trade Group at global law practice Eversheds Sutherland.

The trade balance for goods narrowed to 12.1 billion pounds ($15.36 billion) from 15.4 billion pounds in March.

Other reports by Click Lancashire

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