UK economy shrinks after Brexit car factory shutdowns

Wednesday 12th June 2019 05:48 EDT

Official figures suggest the British economy shrunk in April during a dramatic decline in car production ahead of the original Brexit deadline. The Office for National Statistics said, gross domestic product (GDP) plunged by 0.4 per cent in April from a month earlier as factories across the country launched a wave of planned shutdowns to avoid any disruption that could have been caused by a no-deal. British manufacturers had planned on leaving the EU on March 29 with Theresa May pushing the country towards a no-deal. She, however, agreed an extension until April 12 and then delayed the process until the end of October.

With economic growth stabilising, factories soon piled up on materials ahead of the deadline, and recent figures suggest the economy shows that production slumped after the target date passed. The decline is the worst monthly GDP performance for the UK since March 2016.

Rob Kent-Smith, the head of GDP at the government statistics agency, said the decline was caused by falling car production amid the uncertainty over leaving the EU. He said, "There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK's original EU departure date has faded."

While UK car manufacturers have struggled amid faltering demand for exports from China, several firms said they would temporarily halt activity due to Brexit, while some said they would ultimately close factories altogether, with thousands of job losses. Jaguar Land Rover staged a week-long factory shutdown as part of its plans for Brexit in April. BMW and Peugeot also brought forward annual maintenance stoppages that usually take place in the summer.

Earlier this month, the Society of Motor Manufacturers and Traders (SMMT) said that car production fell by almost half in April, with an "extraordinary" drop from 127,970 cars rolling off production lines in April 2018 to 70,971 this year, a fall of 44.5 per cent. The rate of growth over the three months to April has slowed to 0.3 per cent from 0.5 per cent in the first three months of the year, when stockpiling had helped boost the economy.

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