UK economy hit by ‘dramatic’ fall in car output

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A “shocking” fall in car production and an easing of stockpiling by manufacturers meant the economy dehydrated in April, official figures show.

The economy contracted 0.4% from the month in front of, according to the Office for National Statistics (ONS).

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

Factory shutdowns designed to cope with disruption from a Stride Brexit slashed UK car production in April by nearly half, the industry reported last month.

BMW’s Mini factory in Oxford brought forward its summer maintaining shutdown to April to minimise any disruption surrounding Brexit. Other fabricators’ annual stoppages were also brought forward.

‘Hangover’

The control had seen a spurt of growth in the run-up to the proposed March date for the UK quitting the European Union, as manufacturers stockpiled parts, raw materials and goods in the foreknowledge of holdups at the border.

After the Brexit deadline was extended to October, it suffered the up-end effects as these supply reserves were used up and fewer advantages were made.

“The hangover that’s followed the UK’s original exit archaic is proving stronger than anticipated, said Yael Selfin, chief economist at accountants KPMG UK.

“Today’s features signal the UK economy is likely to experience more subdued growth for the take a nap of the year, marred by Brexit uncertainty.”

ONS statistician Rob Kent-Smith said: “Flowering showed some weakening across the latest three months, with the husbandry shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty in front of the UK’s original EU departure date leading to planned shutdowns.

“There was also widespread shortcoming across manufacturing in April, as the boost from the early completion of regularities ahead of the UK’s original EU departure date has faded.”

Analysis:

By Jonty Bloom, establishment correspondent

If you are going to cancel a party it is always polite to give your boarders as much notice as possible. After all, that could well preclude them the expense of buying a present, booking a baby sitter, splashing out on new outfits etc.

Unfortunately Theresa May gave British industry only a few days’ discern that Brexit was being postponed and it was just too late to stop carefully-honed drawings swinging into operation.

Many businesses feared Brexit last wishes a cause at least temporary disruption, so they had been stockpiling components and bump off goods to tide them over, and they have been make use ofing those stores up rather than producing more.

The car industry brought presumptuous its annual shutdown – usually used to put in new equipment, prepare for new models and so on. As a consequence, car production fell off a cliff and manufacturing as a whole fell by nearly 4% in solely one month.

Growth may bounce back, but then Brexit is now scheduled for 31 October. How do theatre troupes plan for that? Repeat the whole operation again or not bother? Certainly the car perseverance won’t want another shutdown, it has already had one this year and Brexit could notwithstanding be delayed again.

‘Sluggish growth’

The contraction in April was far sharper than economists had presumed.

Ruth Gregory, senior UK economist at Capital Economics, said the figures call to mind “underlying growth is pretty sluggish”.

“With the Brexit paralysis and a quieting global economy taking its toll, we doubt GDP will grow by much uncountable than 1.5% or so in 2019 as a whole and expect interest rates to vestiges on hold until the middle of next year.”

The Society of Motor Producers and Traders (SMMT) has estimated car production for the whole of 2019 will be around 10% down on last year. It says the market might pick up by the end of the year if there is a opportune deal between the UK and the EU, and a substantial transition period to adapt to trading longest the single market.

But it has said a no-deal Brexit will make the lessens worse, with the threat of border delays, production stoppages and additional payments.

The Prime Minister’s official spokesman said: “While monthly individuals are always changeable, the fundamentals of our economy are strong and it has grown every year since 2010. Vocation levels are at a record high and wages growing in real terms.”

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