UK one negative quarter from recession as economy shrinks in second quarter

Britain is one negative quarter from an economic downturn following the economy shrank within the second quarter.

ONS data released today showed the economy contracted by 0.2 percent within the second quarter following growth of 0.5 per cent in Q1.

Sterling has fallen against the US dollar and also the euro as a direct consequence of the GDP figures.

The pound has become down by 0.3 percent against the euro and 0.25 % against the US dollar, after UK economic growth came in significantly lower than expected.

Economists had predicted growth to flatline at 0 per cent – but GDP actually contracted by 0.2 percent, a fairly big miss.

It is the very first time the UK economy has contracted since 2012, with the abrupt lack of momentum coming as many firms ran down inventories built up in front of the original March 29 deadline to depart europe.

New Statesman Assistant Editor George Eaton warned that the UK is within a “far weaker position for an additional recession compared to 2008” because there’s less room for fiscal and monetary stimulus.

Stock levels fell by 4.4 billion pounds ($5.3 billion), knocking 2.15 percentage points off GDP.

The economy was also hit by auto factories bringing forward summer maintenance shutdowns to April to avoid the threat of supply disruptions around the original Brexit deadline.

Manufacturing, which enjoyed a bumper first quarter, shrank 2.3 per cent within the following three months, the most since 2009.