LONDON (Reuters) – Britain’s economy shrank for the first time since 2012 in the second quarter, a severe hangover from a pre-Brexit stockpiling boost and one that bodes poorly as Prime Minister Boris Johnson gears up to leave the EU in October.
FILE PHOTO: The City of London is seen from Canary Wharf, Britain May 17, 2017. REUTERS/Stefan Wermuth/File Photo
Sterling slid to a new 31-month low against the dollar after data showed output in the world’s fifth-largest economy fell by 0.2% in the three months to June compared with the previous quarter, below all forecasts in a Reuters poll of economists that had pointed to a flat reading.
With Johnson’s government committed to leaving the European Union on Oct. 31, regardless of whether he can secure a transition deal to avoid trade disruption, the outlook for the remainder of 2019 is uncertain.
The world economy has also slowed due to the trade conflict between the United States and China.
Year-on-year economic growth slid to 1.2% from 1.8% in the first quarter, Britain’s Office for National Statistics said, its weakest since the start of 2018.
“There is … little doubt that the economy is stalling, regardless of the volatility in the data,” PwC senior economist Mike Jakeman said.
GRAPHIC: British economic output declines for 1st time since 2012 – tmsnrt.rs/2YzMP00
He said the Brexit crisis and the uncertain global outlook left Britain’s economy on a “knife-edge” for the third quarter.
Finance minister Sajid Javid told the BBC he was not expecting a recession “at all”. He added that the figures – which none of the 51 economists polled by Reuters predicted – “were not a surprise in any way”.