Javid not expecting recession 'at all' after GDP drops

Javid not expecting recession 'at all' after GDP drops”

It comes as gross domestic product (GDP) decreased by 0.2% between April and June, according to figures released on Friday by the Office for National Statistics (ONS).

The decline in GDP was driven by uncertainty over Brexit, as well as shutdowns in the vehicle industryStockpiles of manufactured goods built up earlier this year in anticipation of the first Brexit deadline in March also caused production to decrease in the second quarter.

The UK's economy shrank for the first time since 2012 in the second quarter of this year, as the manufacturing and construction sectors both slumped. But June manufacturing data was also unexpectedly poor and output for the quarter contracted at the fastest rate since early 2009, when Britain was mired in recession.

"And you know why they're not?"

The statistics body said its latest figures showed that those increased stockpiles had been partly run down in the second quarter and that a number of auto manufacturers had brought forward their annual shutdowns to April as part of contingency planning, which also hit growth.

A report in the Financial Times that Prime Minister Boris Johnson was planning to hold a parliamentary election in the days after Brexit if lawmakers sink the government with a no-confidence vote has also weighed on the pound.

The Times reports that the Government has drawn up a list of companies - including some of those in the construction and manufacturing sectors - which it believes could be financially exposed in any volatility following the United Kingdom leaving the European Union without a deal.

"As a result, the Pound has dropped back to the yearly lows of last month".

That stockpiling boon helped the economy grow by 0.5 percent in the first quarter. With Prime Minister Boris Johnson's government committed to leaving the European Union on Oct 31, regardless of whether he can secure a new transition deal to avoid trade disruption, the outlook for the remainder of 2019 is especially uncertain.

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

But the figures appear to confirm dire predictions about Brexit.

Chris Williamson, chief business economist at IHS Markit, said the data showed "an economy in decline and skirting with recession as headwinds from slower global growth are exacerbated by a Brexit-related paralysis".

The first five months of export data from Ireland to Britain have seen goods values rise by 9pc from a year ago, a gain of €486mn to a tad over €6bn, despite the lower value of sterling, although the impact may start to show up pound's decline has accelerated since then and it recently hit a 2-year low against the euro.

Construction output was also weaker, falling by 1.3 per cent. The Bank of England has indicated there is a one-in-three chance of a recession early next year even if a smooth Brexit is negotiated.

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