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© Reuters. Workers assemble cars at the Mini Car range factory in Cowley, near Oxford
LONDON (Reuters) – The UK economy contracted sharply in April after the biggest drop in auto production since records began, as automakers failed to cancel planned shutdowns. the early departure of Britain from the EU.
By the beginning of 2019, many automakers had announced temporary shutdowns in April in Britain, anticipating a disruption of trade around the time Britain left the EU on March 29.
In this case, Premier Theresa May postponed the start to a few days and then set a new date for October 31 – but it was too late for companies to change their plans.
Britain's overall economy contracted 0.4% in April after falling 0.1% in March, the Office for National Statistics announced on Monday, a bigger drop than expected economist in a poll conducted by Reuters last week.
Growth at the end of April slowed down from 0.5% in the first quarter of 2019 to 0.3%, a sharper decline than expected by most economists. Annual growth slowed to 1.3%.
This, however, masked a much larger impact on the manufacturing sector, which declined 3.9% in April, the largest decline since June 2002.
In April, car production fell by 24%, the largest decline since records began in 1995, and the broader category of "transport equipment" recorded its largest decline since 1974.
"GDP growth has eased somewhat over the past three months, with the economy contracting in April, mainly due to a dramatic drop in auto production." preceding the departure date of the EU in the UK, which resulted in planned shutdowns, "said the ANS statistician, Rob Kent-Smith said.
BMW closed its UK Mini and Rolls-Royce (LON 🙂 factories throughout the month of April. The Peugeot car factory of Vauxhall and Jaguar Land Rover have also announced the summer closures scheduled for April.
Monday's data confirms that the economy slows after receiving a bigger boost than expected in the first three months of 2019 thanks to business storage before a Brexit that never took place.
The Bank of England announced last month that GDP growth would slow to 0.2% in the three months to June, from 0.5% in the first quarter of the previous year, although Saturday , his chief economist, Andy Haldane, has written that he still expects a "solid" growth of 1.5% for the whole of 2019.
Surveys on May's purchasing managers' indexes revealed that the economy was about to stagnate, although they were just as gloomy in the first quarter when official data came in. proved strong, despite companies' concerns about Brexit.
"The decline in GDP in April and the seemingly persistent weakness in May reinforce our belief that the economy will move towards a much weaker performance in the second quarter," said Howard Archer, chief economist at the EY ITEM consulting firm. Club, in a note.
"We expected GDP growth to be no more than 0.2% qoq in the second quarter, but even this weak performance now looks somewhat optimistic."
The UK economy has lost momentum since the Brexit referendum of 2016 – before which growth would typically exceed 2% per year – but the job market has strengthened and Haldane said that the moment of another rate hike was approaching.
This position contrasts with the market outlook, where concern over the US-China trade conflict has intensified, along with the risk that Britain will continue to face a disruptive breach. with the EU on October 31st.
The impact of the dual concern of trade and Brexit tensions is also visible in the trade data, also released Monday.
Britain has seen its largest monthly decline in goods imports since records began in 1998, down 14.4% in April. Exports also declined on a monthly basis, down 10.9% in April, the largest decline since July 2006.
The trade deficit has shrunk, as high levels of business imports to prepare for Brexit before the March 29 deadline have declined.
The goods trade balance fell from 15.4 billion pounds in March to 12.1 billion pounds (15.36 billion dollars).
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