THE biggest slump in car production for more than 40 years sent Britain’s economy into reverse in April.
Shock official figures revealed economic output – or GDP – fell by 0.4 per cent. And it was fuelled by car makers bringing forward annual factory shutdowns in case there was a ‘No Deal’ Brexit on March 29.
BMW Mini was one of the car plants that shutdown for fear of a No Deal Brexit, resulting in a GDP slump[/caption]
Theresa May avoided a No Deal by signing a negotiating extension with Brussels. The GDP fall marks the second consecutive month the economy has contracted.
And the scale of the 0.4 per cent stunned City experts who had been predicting a minor 0.1 per cent drop. Car production was down 24 per cent – the worst performance since the mid-1970s.
And manufacturing output fell by the biggest extent since 2002.
‘MARRED BY BREXIT UNCERTAINTY’
BMW Mini was one of those who brought forward its traditional summer shutdown. Jaguar Land Rover staged a week-long closure.
Experts said Britain’s economy was clearly being “dragged down” by the Brexit uncertainty.
Yael Selfin, chief economist at KPMG UK, said: “The hangover that’s followed the UK’s original exit date is proving stronger than anticipated.
“Today’s figures signal the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.”
Lib Dem leadership contender Ed Davey: “This is a really worrying indicator of the fragile state of our economy and should shame any Tory leadership candidate continuing to push for a no-deal Brexit.
“If just uncertainty can cause this shrink in manufacturing and our GDP, then it doesn’t bear thinking about what crashing out of Europe with no-deal could do.”
Today’s figures signal the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.
The figures mark a stark contrast with the first three months of the year – when growth surged on firms stockpiling to prepare for a possible No Deal.
Experts yesterday warned GDP growth this year may only hit 1.5 per cent.
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But they added the sluggish output meant there was little chance of homeowners being hit by higher interest rates until the middle of next year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics said that although GDP figures for April to June could be “awful”, the economy should recover later in the year.
“We’re reluctant to conclude that the economy has fundamentally lost momentum, given the still-bright outlook for households’ real incomes,” he said.
Ed Davey said this was a ‘worrying indicator of the fragile state of our economy’ and pushed for Tory candidates to speak against No Deal Brexit[/caption]
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