Markets surprised by worst UK economic output for seven years
Business output has slowed, says ONS
Sterling slipped further as new data showed the UK economy shrank by 0.2% between April and June, its worst performance since 2012.
The surprise contraction followed intense stockpiling in the first three months of the year and prompted concern that the country could be heading for recession.
Rob Kent-Smith, head of GDP at the Office for National Statistics, said manufacturing output fell and the construction sector weakened.
“Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure date from the EU,” he said.
Economists had not been forecasting a contraction in the economy in the second quarter but had expected it to stagnate, with the consensus forecast for 0% growth.
John McDonnell, Shadow Chancellor, said: “Today’s dismal economic figures are a direct result of Tory incompetence. The Tories’ Brexit bungling, including Boris Johnson now taking us towards no-deal, is breaking the economy.
“The Tories are responsible for tumbling business investment and stagnating productivity – and that, along with nine years of austerity, has contributed to GDP contracting today.
“It’s time for an end to this incompetence from successive Conservative governments – we need a general election and a Labour Government to turn this country around.”
Suren Thiru, head of economics at the British Chambers of Commerce, said: “The latest figures suggest that the UK economy hit the buffers in the second quarter. We’re seeing the unwinding of heightened levels of stockpiling, growing anxiety over the prospect of a no deal exit and moderating global growth having an increasingly chilling effect on economic activity.”