Reduced uncertainty in the British domestic product (GDP) in April, especially due to uncertainties related to the process of British EU membership (Brexit) and the steep fall in the performance of the automotive industry.
According to the data from the British Statistical Office (ONS) on Monday, GDP in April was 0.4 percent lower than a month earlier. This was the second-month downturn in the UK economy, with domestic output declining by 0.1 percent in March.
This does not mean that the British economy is in recession. On the basis of a consensus definition, a economy will be recessioned if GDP falls in two consecutive quarters.
According to ONS Monday’s data, the UK economy continues to grow quarterly, although the growth rate decelerated to 0.3 percent in the three-month period ending in April, following a 0.5 percent rise in the quarter ending in March.
According to the statistical office, the British car industry’s emissions value dropped dramatically by 24 percent in April compared to the previous month, mainly due to the fact that many car manufacturers simply stopped production due to the uncertainties originally planned at the end of March.
The British EU membership would have been abolished on 29 March on the basis of the original timetable, but the agreement with the European Union on the conditions for exiting in November was rejected three times by the London House of Commons.
As a result, Prime Minister Theresa May has twice initiated the postponement of the exit, in order to avoid the UK falling out of the EU in an unorganized way.
On the basis of the decision of the extraordinary EU summit on 10 April, the current delay may be up to 31 October.
The strong performance of the British automotive industry and the broader manufacturing sector is also evidenced by the latest surveys of business organizations.
According to data provided by the British Automobile Manufacturers and Dealers Association (SMMT) on Monday, a total of 71,000 passenger cars were manufactured in April in the British automobile industry, down 44.5 percent from last year’s April. Between the beginning of the year and the end of April, the British car industry fell by 22.4 percent compared to the first four months of last year.
According to the latest activity indicators, the performance of the British manufacturing industry as a whole has started to decline, clearly due to the uncertainties surrounding the Brexit process.
Based on a joint survey of the IHS Markit Financial and Economic Reporting Group and the Chartered Institute of Procurement & Supply, the Purchasing Managers Index (BMI) for the manufacturing sector was steep in May from 53.1 in the previous month to 49.4 fell to.
The BMI indices below 50 refer to the weakening of the activity of the examined sector, ie the new British manufacturing index indicates the decline of the sector’s output.
The May activity rate was 34-month low: most recently in July 2016, the British manufacturing BMI fell below the 50 limit in the month following the referendum on EU membership. In the referendum, the majority of the participants, 51.89 percent, called for the United Kingdom to leave the European Union.