The UK economy shrank 0.4 per cent in April as Brexit paralysis took hold following the proposed deadline for departure from the EU.
The latest monthly fall was four times larger than analysts had forecast and marked the second consecutive month of contraction for the UK’s economy after a 0.1 per cent drop in March.
Stockpiling of goods to deal with a disorderly Brexit on 29 March slowed down after deadline day was moved back to 31 October.
“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 car production, with uncertainty ahead of the U.K.’s original EU departure date leading to planned shutdowns,” said Rob Kent-Smith, head of GDP measuring at the statistics authority, in a statement.
Carmakers adapted their production plans ahead of the March 29 Brexit date by moving summer shutdowns up by a few months, in an attempt to cushion against the impact of a no-deal exit.
“There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the U.K.’s original EU departure date has faded,” said Kent-Smith.
Elizabeth Martins, a senior economist at HSBC bank, said the weakness seems to be further spread than manufacturing.
“Manufacturing fell back — taking out all of the gains of the last three months and then some — but services output was flat and construction fell too. So perhaps not everything can be explained by the reversal of stockpiling,” she said.
