By theguardian |

UK economy returns to growth as carmakers end Brexit shutdown

GDP rose by 0.3% in May from a month earlier, says Office for National Statistics

The British economy returned to growth in May as carmakers resumed production after shutdowns for the original Brexit deadline.

Allaying fears of a recession, the Office for National Statistics said UK GDP rose by 0.3% in May from a month earlier, when stoppages at car plants across the country dragged the economy into contraction.

Manufacturers across the country rushed to stockpile goods in the run-up to the original Brexit deadline of 29 March – driving up economic growth – as they braced for disruption to their supply chains from a no-deal departure.

UK GDP

Carmakers brought forward their annual maintenance shutdowns to April, which would have been immediately after Britain left the EU, to avoid the potential chaos from border delays at UK ports.

Factory output rose by 1.4% in May after a sharp drop of 4.2% in April, with the ONS finding that a partial bounceback from car production had driven up growth.

UK economy returns to growth as carmakers end Brexit shutdown - business live

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Despite the recovery, economic growth for the three months to May fell to 0.3% from 0.4% in the three months to April, suggesting that UK growth has gradually slowed. The ONS warns that single-month growth figures can prove volatile, preferring to assess the economy over a three-month period.

Rob Kent-Smith, the head of GDP at the ONS, said: “GDP grew moderately in the latest three months, with IT, communications and retail showing strength.

“Despite this, there has been a longer-term slowdown in the often-dominant services sector since summer 2018.”

Analysts warned the economy could still shrink in the second quarter as no-deal Brexit fears mount, with closely watched surveys of business activity suggesting negative growth of 0.1% in the three months to June.

Carmaking

Figures from the British Retail Consortium this week showed annual consumer spending growth slowed in June to the weakest rate since records began in 1995.

The slowdown in Britain also coincides with weaker levels of growth elsewhere around the world as tensions between the US and China drag down international trade volumes.

Suren Thiru, the head of economics at the British Chambers of Commerce, said: “The continued slowdown on the underlying three-month measure is further evidence that the UK economy is faltering under the weight of relentless Brexit uncertainty and tougher global economic conditions.”

Topics

Economic growth (GDP)

Economics Brexit Office for National Statistics Manufacturing sector Automotive industry Services sector news

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