Contradicting official figures that show that the manufacturing sector has slumped into recession for the first time since Brexit, the British economy grows at a faster pace in the three months to the end of June. The Office for National Statistics said GDP increased by 0.4 per cent in the second quarter from a rate of 0.2 per cent in the previous three months, helped by stronger retail sales and good weather enabling the construction industry to make-up lost ground from the heavy snow earlier this year.
Chancellor Philip Hammond said, “We are working hard to build a stronger, fairer economy-dealing with the deficit, helping people into work, and cutting taxes for individuals and businesses.” Service industries experienced robust growth of 0.5 per cent in the second quarter, with the retail and wholesale sectors providing the strongest contribution, helped by the warm weather tempting shoppers back to the high street. The latest update from the ONS, however, painted an increasingly lopsided picture for economic growth, with Britain reliant on the services sector amid a downturn for factory output.
The manufacturing industry recorded its second consecutive quarter of negative growth amid weaker international demand for British goods. While manufacturing output fell by 0.9 per cent, the sector is smaller than the dominant services industry, meaning its drag on overall economic growth was only worth about 0.1 per cent. Lee Hopley, chief economist at the EEF manufacturers's organisation said the industry could face tough conditions ahead. She said, “The autumn Brexit negotiations and related focus on the risk of 'no deal' will increase uncertainty.”
Britain’s trade deficit – the difference between imports and exports – widened by £4.7bn to reach £8.6bn in the three months to June, due mainly to falling exports of goods and higher levels of imports. The figures also show the UK becoming more reliant on the EU for trade, despite the efforts of ministers to drum-up interest elsewhere around the world. Over the past year, exports and imports of goods to and from the EU increased by more compared with non-EU countries.
