UK economy suffers shock pre-Brexit contraction in second-quarter, first since 2012

[snoop1130]

UK economy suffers shock pre-Brexit contraction in second-quarter, first since 2012

By Andy Bruce, David Milliken

 

FILE PHOTO: Canary Wharf and the City of London financial district are seen from an aerial view in London, Britain, August 8, 2019. REUTERS/Hannah McKay/File Photo

 

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 in early 2019 and one that bodes poorly as Prime Minister Boris Johnson gears up to leave the EU in October.

 

Sterling fell and British stocks sold off after data showed output in the world’s No.5 economy fell at a quarterly rate of 0.2% in the three months to June, 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 largely to a trade dispute 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.

 

He said the Brexit crisis and the uncertain global outlook left Britain’s economy on a “knife-edge” for the third quarter.

 

Annual growth in June alone was the weakest since August 2013 at 1.0%.

 

DOVISH DATA

 

The Bank of England last week predicted that growth will only stage a limited pick-up to a quarterly rate of 0.3% during the current quarter, and that growth for the year as a whole will drop to 1.3%.

 

It also warned of a 1-in-3 chance that output in annual terms will contract in the coming quarters.

 

“The Bank of England has retained its tightening bias but any continued economic weakness will mean policymakers are likely to take an increasingly dovish stance,” Chris Williamson, chief business economist at IHS Markit, said.

 

Previous data had shown a collapse in factory output in April as car manufacturers brought forward their annual summer shutdowns to follow the original March 29 Brexit deadline that was postponed to Oct. 31.

 

But June manufacturing data was also unexpectedly poor and output for the quarter contracted at the fastest rate since early 2009, when Britain was mired in recession.

 

Private-sector business surveys have shown the manufacturing and construction sectors both contracted in July, while the larger services sector eked out only modest growth.

 

Britain’s economy has slowed since June 2016’s vote to leave the EU, with annual growth rates dropping from more than 2% before the referendum to expand by 1.4% last year.

 

Friday’s data showed business investment contracted 0.5% in the second quarter of the year versus economists’ expectations of a 0.3% fall.

 

Household spending, which has been much more resilient than business investment, due to falling unemployment and rising wages, rose 0.5% on the quarter.

 

Trade figures and its contribution to GDP were distorted erratic flows of non-monetary gold and also showed the effect of businesses building up fewer stocks than in the first quarter of the year when they were readying for Brexit.

 

-- © Copyright Reuters 2019-08-09

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[Mavideol]

2 minutes ago, snoop1130 said:

He said the Brexit crisis and the uncertain global outlook left Britain’s economy on a “knife-edge” for the third quarter.

there we go.... reality starts to hit back but (surely) some here will call it fake news 555

[from the home of CC]

seems the indecision is causing the most carnage..

[Chomper Higgot]

Oops!

[Jip99]

Shock !!

 

 

 

 

NOT.......

 

 

Now get on with getting out and let's see what the economy can really do.

[nauseus]

Before the EU rabids get carried away:

 

https://www.cnbc.com/2019/08/09/european-stocks-trade-worries-weigh.html

[billd766]

32 minutes ago, Mavideol said:

there we go.... reality starts to hit back but (surely) some here will call it fake news 555

What is reality? Well I doubt that it is fake news but it should be taken in context as there are big problems in Italy along with the EU and the world trading in general.

 

Is it this where all the economists got it wrong?

 

Sterling fell and British stocks sold off after data showed output in the world’s No.5 economy fell at a quarterly rate of 0.2% in the three months to June, below all forecasts in a Reuters poll of economists that had pointed to a flat reading.

 

Or this? The BoE rarely get their forecasts correct and always look on the gloomy side.

 

The Bank of England last week predicted that growth will only stage a limited pick-up to a quarterly rate of 0.3% during the current quarter, and that growth for the year as a whole will drop to 1.3%.

 

Friday’s data showed business investment contracted 0.5% in the second quarter of the year versus economists’ expectations of a 0.3% fall.

 

The world economy has also slowed due largely to a trade dispute between the United States and China.

 

Perhaps it isn't all Brexit after all.

 

Thanks to a link from nauseus.

 

https://www.cnbc.com/2019/08/09/european-stocks-trade-worries-weigh.html

 

The pan-European Stoxx 600 slipped 0.5% by mid-morning. Bank stocks shed 1.3% as shares of Italian lenders tumbled amid political uncertainty, while autos led losses with a 1.5% drop.

Italy’s coalition government imploded on Thursday, as deputy prime minister and leader of Italy’s ruling Lega party, Matteo Salvini, declared the arrangement unworkable and called for fresh general elections.

In the latest trade war developments, a majority of economists polled by Reuters said the recent escalation of tensions between the U.S. and China had brought forward the next U.S. recession, and indicated that the Federal Reserve is likely to cut rates again in September before a further cut next year.

 

[from the home of CC]

With the Trump/China 'trade wars', this protracted problem and some other issues all adding up to a nasty economic slump I certainly hope people have prepared their storm shelter, there's not much sunshine on the horizon. Personally, I have invested in a bazooka to repel the hordes rappelling onto my condo balcony when the power finally dies.. 

[Lawrence Young]

Absolute tosh. Its really quite staggering the sensational headlines that continue to be rolled out even after 3 years. Can I remind everyone of George Osbournes claim just before the referendum that we would have an 18% collapse in pretty much everything including UK house prices. we would end up in a recession. The truth is 3 years later house prices outside of London have gone up 17% and no recession. Europe is flat. Germany is stagnated. Italy called for a snap election yesterday. Its absolute rubbish to look at the slight downturn in GDP. London financial markets have already swallowed up ant Brexit worries. Going forward it is absolutely in the UKs best interests to get out. I used to say short term pain for long term gain. I dont even believe in that anymore. No short term pain will exist. 

[Chomper Higgot]

It’s remarkable, Brexiteers have gone from telling us the negative economic impact of jettisoning the UK’s largest market is a price worth paying, to denying the existence negative impacts altogether or blaming them on anything but Brexit.

 

 

[evadgib]

This sums it up:

 

(Content not poster!)

[stevenl]

1 hour ago, Lawrence Young said:

Absolute tosh. Its really quite staggering the sensational headlines that continue to be rolled out even after 3 years. Can I remind everyone of George Osbournes claim just before the referendum that we would have an 18% collapse in pretty much everything including UK house prices. we would end up in a recession. The truth is 3 years later house prices outside of London have gone up 17% and no recession. Europe is flat. Germany is stagnated. Italy called for a snap election yesterday. Its absolute rubbish to look at the slight downturn in GDP. London financial markets have already swallowed up ant Brexit worries. Going forward it is absolutely in the UKs best interests to get out. I used to say short term pain for long term gain. I dont even believe in that anymore. No short term pain will exist. 

Those were brexit predictions. As you may know that hasn't happened yet.

[Chomper Higgot]

Now borrowing economic policies from failed Banana Republics:

 

https://www.businessinsider.com/michael-gove-discussed-closing-banks-the-day-after-no-deal-brexit-2019-8

[DougM]

9 hours ago, Lawrence Young said:

Absolute tosh. Its really quite staggering the sensational headlines that continue to be rolled out even after 3 years. Can I remind everyone of George Osbournes claim just before the referendum that we would have an 18% collapse in pretty much everything including UK house prices. we would end up in a recession. The truth is 3 years later house prices outside of London have gone up 17% and no recession. Europe is flat. Germany is stagnated. Italy called for a snap election yesterday. Its absolute rubbish to look at the slight downturn in GDP. London financial markets have already swallowed up ant Brexit worries. Going forward it is absolutely in the UKs best interests to get out. I used to say short term pain for long term gain. I dont even believe in that anymore. No short term pain will exist. 

The pound was at 55฿ / £1 shortly before the vote to leave. Now it's at 36฿. That's 44% less. ????

[zorrow424]

Its been lower,so what?   The resolve of Boris now is to get us out of the EU ,pity the date is another 80 days off tho.  Boris has one hell of a war chest , 39 billion not going to EU,70 billion a year trading deficit with EU , 9 billion contributions axed,he could start spending some of that 3rd quarter

   Boris utterly loathes the Irish,he can use the Irish backstop as prime mover to get the UK out of EU,but danger is EU will start blinking,not a good thing,but trading deficit with EU is another good reasoning to get shut of EU,trade elsewhere at massive saving 

[zorrow424]

44 minutes ago, DougM said:

The pound was at 55฿ / £1 shortly before the vote to leave. Now it's at 36฿. That's 44% less. ????

Duh!!!  So have other currencies also      £ up almost 1% overnight    rejoice  lol

[BritManToo]

1 hour ago, DougM said:

The pound was at 55฿ / £1 shortly before the vote to leave. Now it's at 36฿. That's 44% less. ????

Best I ever got was 52 between 2009 and 2019, now 37. (-29%)

Australia best was 33 between 2009 and 2019, now 21. (-36%)

 

Even using your fake numbers 36/55, only gives -34%

The shills for project fear never stop.

[HauptmannUK]

19 minutes ago, BritManToo said:

Best I ever got was 52 between 2009 and 2019, now 37. (-29%)

Australia best was 33 between 2009 and 2019, now 21. (-36%)

 

Even using your fake numbers 36/55, only gives -34%

The shills for project fear never stop.

I transferred about £20k to Thailand around 10th Sept 2015 and got 55.5THB. I remember it well because I was hoping it would break 56THB.  Right now 1GBP=36.64THB.

The situation now is that the GBP is a busted currency. Confidence has gone. The lunatics have taken over the asylum. Even if Article 50 were withdrawn tomorrow it would take some years to rebuild investor confidence in the UK economy, its governance and currency.

[BritManToo]

4 minutes ago, HauptmannUK said:

Right now 1GBP=36.64THB

37.0328.

 

[Loiner]

No shock here. They excused the economy increase in the first quarter as due to to Brexit stockpiling. So now a 0.2% second quarter reduction is a calamity? Remainer ball licks.


Sent from my iPhone using Thaivisa Connect

[Emdog]

13 hours ago, from the home of CC said:

With the Trump/China 'trade wars', this protracted problem and some other issues all adding up to a nasty economic slump I certainly hope people have prepared their storm shelter, there's not much sunshine on the horizon. Personally, I have invested in a bazooka to repel the hordes rappelling onto my condo balcony when the power finally dies.. 

As a proud 'Merican (kidding about proud) I suggest getting an assault rifle if you need home defense in scenario you present. A bazooka could only take out one or two, and take some time to reload. Cheers

[zorrow424]

12 hours ago, Chomper Higgot said:

It’s remarkable, Brexiteers have gone from telling us the negative economic impact of jettisoning the UK’s largest market is a price worth paying, to denying the existence negative impacts altogether or blaming them on anything but Brexit.

 

 

You only have to take a stroll through this useless post to see just how useless a finger on keyboard is.  Hardly worth a reply,just a few duhs will do.  "Jettisoning the UKs largest Market is   blah blah blah"

  A rapidly declining one,a trading bloc costing to UK £70 billion deficit year on year    (get Wiki out  quick quick)

   EU finished,UK wants to pitchfork the 3 and a half million EU hangers on in the UK the hell out of it,now there would be real savings

[Chomper Higgot]

44 minutes ago, zorrow424 said:

You only have to take a stroll through this useless post to see just how useless a finger on keyboard is.  Hardly worth a reply,just a few duhs will do.  "Jettisoning the UKs largest Market is   blah blah blah"

  A rapidly declining one,a trading bloc costing to UK £70 billion deficit year on year    (get Wiki out  quick quick)

   EU finished,UK wants to pitchfork the 3 and a half million EU hangers on in the UK the hell out of it,now there would be real savings

You should take another stroll through my post, you failed to address anything in it.

 

 

[leither69]

3 hours ago, DougM said:

The pound was at 55฿ / £1 shortly before the vote to leave. Now it's at 36฿. That's 44% less. ????

That's all to do with brexit Sherlock!!

[leither69]

+.5 in last quarter so in reality +.3 half yearly!!  The German economy is going down the plughole, why do we want to be anchored to a sinking ship.  This is the time to leave.

[leither69]

2 hours ago, HauptmannUK said:

I transferred about £20k to Thailand around 10th Sept 2015 and got 55.5THB. I remember it well because I was hoping it would break 56THB.  Right now 1GBP=36.64THB.

The situation now is that the GBP is a busted currency. Confidence has gone. The lunatics have taken over the asylum. Even if Article 50 were withdrawn tomorrow it would take some years to rebuild investor confidence in the UK economy, its governance and currency.

It's not that the ฿ is strong by any chance? Look past your ATM card and understand finance!!

[ThePioneer]

2 hours ago, BritManToo said:

37.0328.

 

I know you live in the past, but a full day?

 

Why post the rate from the 10th when we are the 11th. It's 36.64 today

 

As for you not receiving more then 52 Bht to the pound since 2009, you have been ripped off, as it has been 56.90 in August 2009

[flossie35]

15 hours ago, from the home of CC said:

seems the indecision is causing the most carnage..

Brexit would cause a lot more. Solution: stop brexit.

 

[stevenl]

1 hour ago, ThePioneer said:

I know you live in the past, but a full day?

 

Why post the rate from the 10th when we are the 11th. It's 36.64 today

 

As for you not receiving more then 52 Bht to the pound since 2009, you have been ripped off, as it has been 56.90 in August 2009

Must be nice, living in the future and able to look back and correct mistakes.

[rickudon]

1 hour ago, zorrow424 said:

You only have to take a stroll through this useless post to see just how useless a finger on keyboard is.  Hardly worth a reply,just a few duhs will do.  "Jettisoning the UKs largest Market is   blah blah blah"

  A rapidly declining one,a trading bloc costing to UK £70 billion deficit year on year    (get Wiki out  quick quick)

   EU finished,UK wants to pitchfork the 3 and a half million EU hangers on in the UK the hell out of it,now there would be real savings

Another brainless Brexiteer, thinking? with his heart not his head. So we kick out the 3.5 million people who actually do a lot of the low paid work in the UK, especially on UK farms. Vegetables, fruit, not harvested, cows not milked, fields not ploughed. 98% of seasonal workers are from the EU. Guess we could recreate the land army and conscript every one not working to do the work ..... but you would have to criminalise people for not turning up for work. Or ... we could import more of our fresh food .... from the EU.

 

You want to cut the deficit? Ban all those European cars people buy. But easier said than done. You want a trade deal with the USA? One of the few countries we have a trade surplus with. Any trade deal would expect us to import MORE, not sell more.

 

We need to consider the implications of Brexit on our current trade, British Agriculture, and British businesses. Initially it will be mainly negative. Very few Brexiteers address that, it is all jam tomorrow, with very few specifics.