Britain’s economy slid enormously in April after the biggest fall in car production since the records began, as manufacturers were unable to bring back the closures that they had planned when Britain was likely to leave the EU.
In early 2019, many manufacturers made an announcement of temporary shutdowns in Britain in April, in order of anticipation of a disruption in the economy as Britain was to leave the European Union on 29th March.
In the event, Prime Minister Theresa May delayed departure with just days to go and subsequently set a new date of Oct. 31 — but this was too late for businesses to change their plans
Britain’s economy overall shrank by 0.4% in April after a 0.1% decline in March, the Office for National Statistics said on Monday, a bigger drop than any economist had forecast in a Reuters poll last week.
Growth in the last three months to April has decelerated to 0.3% from 0.5% in the first quarter of 2019, also a sharper deceleration than most economists had expected, while the annual growth rate fell to 1.3%.
But this situation camouflaged a bigger impact on the manufacturing sector, which contracted by 3.9% which is the biggest decline since June 2002.
Car production in April fell 24% on the month, the biggest drop since records began in 1995, and the broader category of ‘transport equipment’ showed its largest drop since 1974.
“GDP growth showed some weakening across the latest three months with the economy shrinking in the month of April, mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns,” ONS statistician Rob Kent-Smith said.
Monday’s data assures that the economy is slowing down after receiving a big boost in the first three months of 2019 with businesses stockpiling ahead of a Brexit that never came.
The Bank of England forecast last month that GDP growth would slow to 0.2% during the three months to June from 0.5% in the first-quarter of the year, though on Saturday its chief economist Andy Haldane wrote that he still expected “solid” growth of 1.5% for 2019 overall.
Britain’s economy has lost its momentum since Brexit’s referendum held in 2016- before which the growth would exceed 2% a year, but employment has strengthened and Haldane he is anticipating another rate rise.
This stance contrasts with the view in markets, where concerns about the impact of trade conflict between the United States and China have intensified, alongside the risk that Britain could face a disruptive departure from the EU on Oct. 31.
May’s purchasing managers’ index (PMI) surveys pointed to the economy being close to stagnation, although they were similarly gloomy in the first quarter when official data turned out strong, despite businesses’ concerns about Brexit.