October 5, 2023

Brexit uncertainty: UK economy shrinks |  tagesschau.de

Brexit uncertainty: UK economy shrinks | tagesschau.de

Status: 09/08/2019 12:36 PM مساء

For the first time since 2012, the UK’s GDP has fallen again. The Finance Minister tried to calm down. But Prime Minister Johnson’s speech on Brexit does not send any encouraging signs for the economy.

The uncertainty surrounding Britain’s planned exit from the European Union at the end of October is now being seen in the British economy: according to the Office for National Statistics, gross domestic product fell 0.2 percent in the second quarter compared to the previous quarter. This was the first decline since the end of 2012. Economists had only projected a recession on average. In the first quarter, the economy grew 0.5 percent.

The National Statistics Agency noted that it was “a period of increased volatility around the originally scheduled date for the United Kingdom’s exit from the European Union at the end of March”.

The impact of the history of Britain’s exit from the European Union

Several companies stockpiled products earlier this year to prepare if Britain leaves the European Union on March 29 without an agreement on future trade relations. This helped the kingdom grow by 0.5% in the first quarter. Inventories trended lower in the second quarter, slowing growth.

Production in the manufacturing sector decreased by 2.3 percent in the second quarter. This was the largest drop since 2009.

British Chancellor of the Exchequer Sajid Javid tried to calm down. He referred to the current difficult situation in the entire global economy. Many countries are struggling with declining growth. In addition, the base of the British economy is strong, Javid added. Wages are up, employment is at a record high and expectations are growing faster than Germany, Italy or Japan.

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The economy also came under pressure in the third quarter

On the other hand, economists are more skeptical. “There is no doubt that the economy is going straight away,” said Mike Jackman, an analyst at PricewaterhouseCoopers. Due to the hiccups around leaving the European Union and the global economic slowdown, the British economy is also “on the edge of the knife” in the current third quarter.

Meanwhile, with the election of Boris Johnson as prime minister, the likelihood of Britain leaving the European Union without a deal with the EU on October 31 has increased. Berenberg Bank sees only a 30 per cent chance of an orderly exit from the European Union at the end of October. Its expert, Callum Pickering, said uncertainties are likely to persist into the fourth quarter, in the form of a hard Brexit and even new elections. According to economists, the high level of uncertainty is likely to weigh heavily on investments in particular.

Great Britain originally wanted to leave the European Union on March 29. However, the British Parliament was unable to agree on an exit treaty with the European Union. So the exit was postponed for a good six months until the end of October.

Britain’s economy shrinks for the first time since 2012

Imke Köhler, ARD London, August 9, 2019, 6:31 pm.