Brexit turmoil drives UK towards recession

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.

13 August 2019 | Economics

The latest look at the UK economy makes for pretty grim viewing. – David Cheetham, Analyst: XTB

Roland Jackson - Britain's economy unexpectedly shrank in the second quarter of the year on Brexit turmoil, placing the country on the verge of recession and sending the pound tumbling to a 2.5-year low.

Gross domestic product (GDP) fell 0.2% in the April-June period, the first time the economy has contracted in almost seven years, the Office for National Statistics (ONS) said in a statement, blaming a dramatic slump in the construction and manufacturing sectors.

The data, which was worse than market expectations for zero growth and also reflects global economic strains, sent the pound diving to US$1.2056 - the lowest level since early 2017.

Another contraction in the current third quarter would put Britain in an official recession, ahead of the nation's expected withdrawal from the EU at the end of October.

"The latest data reveal an economy in decline and skirting with recession as headwinds from slower global economic growth are exacerbated by Brexit-related paralysis," said IHS Markit economist Chris Williamson.

The result contrasted with 0.5% expansion in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.

Output was buoyed in the first three months of 2019 because Britain had initially been scheduled to leave the European Union at the end of March.

"GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter," said Rob Kent Smith, ONS head of GDP.

"Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK's original departure date from the EU.

"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.

‘Fundamentals strong’

British prime minister Boris Johnson replaced Theresa May in July after winning the governing Conservatives' leadership contest on a pledge to take Britain out of the bloc on 31 October with or without a divorce deal.

Brexiteer Johnson, a pivotal 'Leave' campaigner in the 2016 EU exit referendum, has repeatedly insisted that Britain can make an economic success of Brexit.

New finance minister Sajid Javid on Friday said that the global economy was slowing, but highlighted other recent positive data for the UK.

"This is a challenging period across the global economy, with growth slowing in many countries," said Javid.

"But the fundamentals of the British economy are strong - wages are growing, employment is at a record high and we're forecast to grow faster than Germany, Italy and Japan this year," he added.

"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."

‘Growing threat’

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.

Bank of England governor Mark Carney recently warned that a no-deal Brexit could undermine entire sectors of the economy such as the car industry and farming.

"The latest look at the UK economy makes for pretty grim viewing," XTB analyst David Cheetham said in reference to Friday's data.

"Given the growing threat of a no-deal Brexit that looms menacingly overhead, it would not be at all surprising if the current quarter also shows a contraction - therefore meeting the standard definition of a recession."

Johnson's predecessor May stepped down last month after failing to get her EU-divorce deal through parliament and being forced to delay Brexit twice. – Nampa/AFP

Similar News

 

Serious food, water shortage in Khomas rural

20 hours ago | Economics

There is a severe shortage of food and water in Windhoek rural constituencies, Khomas governor Laura McLeod-Katjirua has said.Speaking at the Khomas town hall meeting...

Defence spends half a billion without approval

20 hours ago | Economics

The ministry of defence spent about N$491.7 million for three consecutive financial years without the approval of Treasury.This is in direct contravention of the State...

Zim calls off protests after court ban

20 hours ago | Economics

Harare - Opposition mass protests against deepening economic problems in Zimbabwe were called off on Friday after a court upheld an 11th hour ban imposed...

Zim opposition vows protests

3 days ago - 16 August 2019 | Economics

Harare - Zimbabwe's main opposition party has vowed to go ahead with protests week against the worsening economy, dismissing government threats to stop the demonstrations.The...

Best July in four years

3 days ago - 16 August 2019 | Economics

Jo-Maré Duddy – July’s food inflation data contain sweet and sour, but mostly sweet ingredients: The overall figure of 3.7% is the mildest so far...

Africa Briefs

3 days ago - 16 August 2019 | Economics

South Africa yesterday announced visa waivers for four countries in a bid to boost tourism amid an economic crisis and falling visitor numbers.Visitors from Qatar,...

Russia warns China over illegal logging

3 days ago - 16 August 2019 | Economics

MOSCOW - Russia could ban timber exports to China unless Beijing takes action to help mitigate the effects of illegal logging, a Russian government minister...

Crunching numbers

3 days ago - 16 August 2019 | Economics

In his new role, Gous will be responsible for looking after the non-financial sales in the commercial segment, mainly focusing on the SME segment. More...

Chinese astronauts to visit Namibia

3 days ago - 16 August 2019 | Economics

China’s first-ever female astronaut to be launched into space, Liu Yang, will be visiting Namibia from 19 to 23 August. She will be accompanied by...

Inflation takes another dip

4 days ago - 15 August 2019 | Economics

Annual overall inflation in Namibia last month settled at 3.6%, down from 3.9% in June and the lowest so far in 2019.A year ago, overall...

Latest News

Kärcher Centre Taurus opens its...

20 hours ago | Business

Windhoekers have been in for a treat since the past Saturday when the first fully fledged Kärcher Centre in Southern Africa outside of South Africa...

Defence spends half a billion...

20 hours ago | Economics

The ministry of defence spent about N$491.7 million for three consecutive financial years without the approval of Treasury.This is in direct contravention of the State...

Daily grind

20 hours ago | Labour

Even though most of Namibia's more than 72 000 domestic workers earn above the minimum N$1 502 a month, close to 80% of them say...

Corpses rot in homes

20 hours ago | Health

Unregistered deaths, including infant mortalities, and corpses being left to rot in homes over weekends, are just some of the challenges being faced by the...

Young mom hacked to death

20 hours ago | Crime

A 23-year-old woman was brutally murdered this past Friday in Kavango West, allegedly by her long-time boyfriend, who hacked her to death with an axe...

It was tough - Tomas

20 hours ago | Sports

LIMBA MUPETAMI Namibian long-distance runners Rainhold Tomas and Alina Armas are the winners of the 19th edition of the Old Mutual Victory Race in the...

Uganda, Zambia deny Huawei spying...

20 hours ago | Business

Kampala - Uganda and Zambia on Friday denied a report that employees of Chinese telecom giant Huawei had helped them spy on political opponents.The Wall...

Vetkoek court fight postponed

20 hours ago | Business

Yanna Smith - The High Court matter in which Namib Mills has sued Bokomo Namibia for “dishonest practises in industrial or commercial matters” was postponed...

Import VAT exemption on certain...

20 hours ago | Business

The Namibia Agricultural Union (NAU) approached the department of inland revenue to exempt certain animal feed products by Namibian farmers from import value-added tax (VAT)....

Load More