Fall in vehicle production hits United Kingdom growth

GDP and Pound Euro

GDP and Pound Euro

The contraction meant growth for the three months to April slowed to 0.3%.

The UK economy shrank by 0.4% in April in its biggest contraction since March 2016, according to new data from the Office for National Statistics (ONS).

Auto production fell by 24pc and manufacturing as a whole by 3.9pc in April.

The ONS's head of GDP, Rob Kent-Smith said: "GDP growth showed some weakening across the latest 3 months, with the economy shrinking in the month of April mainly due to a dramatic fall in vehicle production, with uncertainty ahead of the UK's original European Union departure date leading to planned shutdowns".

Economists had predicted a much more modest 0.1% decline.

This is mostly linked to planned shutdowns as a result on Brexit uncertainty but factory output figures definitely didn't help as the stockpiling effect from Q1 fades and the truth is revealed on the underlying strength of the UK's manufacturing and industrial sectors.

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Although Brexit has been delayed until Halloween, the shutdowns went ahead anyway.

"April's dip in GDP and apparent ongoing softness in May reinforces our belief that the economy is headed for a markedly weakened performance in the second quarter", Howard Archer, chief economist at consultants EY ITEM Club, said in a note.

While economic growth had strengthened as factories rushed to stockpile materials ahead of the deadline, the latest snapshot from the economy shows that production slumped after the target date passed. Today's figures signal the United Kingdom economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.

"I am quite clear that we [Britain] have to pay what is owed up to the date we leave, as a matter of law", said Ros Kellaway, head of the Competition, EU and Trade Group at global law practice Eversheds Sutherland.

Industry data for the month of April had already shown that the number of vehicles rolling off production lines had plummeted by nearly 45% in April compared to the same month in 2018. Exports also slid on a monthly basis, down 10.9 per cent in April, the biggest fall since July 2006.

The trade balance for goods narrowed to 12.1 billion pounds ($15.36 billion) from 15.4 billion pounds in March.

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