Whether it is the effects of Brexit or the global economic slowdown, the U.K. economy shrank by 0.2% in the second quarter, according to the Office of National Statistics, a drop many experts had not expected.
The Independent reported on the U.K. economy:
The Office for National Statistics (ONS) said the economic contraction was driven by a plunge in manufacturing output. The ONS attributed the decline partly to lower car production as annual summer shutdowns for planned maintenance were brought forward to April in anticipation of the last Brexit deadline.
The numbers are also a disappointment when measured against the International Monetary Fund’s World Economic Outlook, last revised in July. According to the outlook, “The United Kingdom is set to expand at 1.3 percent in 2019 and 1.4 percent in 2020 (0.1 percentage point higher in 2019 than forecast in the April WEO).”
The United Kingdom is currently the world’s seventh-largest economy, with gross domestic product last year of $3.02 billion. The CIA Factbook recently pointed out the risk to U.K. expansion:
The UK economy has begun to slow since the referendum vote to leave the EU in June 2016. A sustained depreciation of the British pound has increased consumer and producer prices, weighing on consumer spending without spurring a meaningful increase in exports. The UK has an extensive trade relationship with other EU members through its single market membership, and economic observers have warned the exit will jeopardize its position as the central location for European financial services.
No recession so far, but the risks are growing.