LONDON: Official data revealed on Friday, Britain’s economy shrank unexpectedly in the second quarter of the year on Brexit turmoil, placing the country on the verge of a recession.
Office for National Statistics (ONS) said in a statement, “Gross domestic product (GDP) fell 0.2 % in the April-June period, the first time the economy has contracted in almost seven years.”
The data, which was worse than market expectations for zero growth, sent the pound sliding against the euro and dollar.
The latest reading contrasted with 0.5 % expansion in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.
Rob Kent Smith, head of GDP at the ONS said, “GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter. 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. Another contraction in the current third quarter would put Britain in official recession, ahead of the nation’s expected EU withdrawal at the end of October.”
British Prime Minister Boris Johnson replaced Theresa May in July after winning the Conservatives Party’s leadership contest on a pledge to take Britain out of the bloc with or without a divorce deal on October 31.
XTB analyst David Cheetham said, “The latest look at the UK economy makes for pretty grim viewing.”
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.