UK economy suffers before Brexit

The Uk economy has started to suffer before the Brexit. The country is preparing to leave the EU on October 31st but it has to consider the consequences. In fact, Britain’s economy shrank for the first time since 2012 in the second quarter.

Uk after Brexit

With prime minister Boris Johnson’s government committed to leaving the European Union on October 31st, regardless of whether he can secure a new transition deal to avoid trade disruption, the outlook for the remainder of 2019 is especially uncertain. At the moment it is very difficult to forecast what the future will be for the UK economy after Brexit.

Britain’s economy has slowed since June 2016’s vote to leave the EU, with annual growth rates dropping by more than 2 per cent before the referendum to expand by 1.4 per year.

The contraction

There are many areas to consider to analyze this contraction. Gross domestic product fell at a quarterly rate of 0.2 per cent in the three months to June. Previous data had already shown a collapse in manufacturing output in April as car manufacturers brought forward their annual summer shutdowns to follow the original March 29th Brexit deadline that was postponed to October 31st. But June manufacturing data was also unexpectedly poor and output for the quarter contracted at the fastest rate since early 2009, when Britain was mired in recession.

Private-sector business surveys have shown the manufacturing and construction sectors both contracted in July.

The Bank of England last week predicted that growth will only stage a limited pick-up to a quarterly rate of 0.3 per cent during the current quarter, and that growth for the year as a whole will drop to 1.3 per cent.

Francesco Iriti
Francesco Iriti

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