Brexit turmoil drives United Kingdom economy towards recession

Brexit turmoil drives United Kingdom economy towards recession

Prime Minister Boris Johnson's Brexit war cabinet is expected to discuss the bailout plans, known as Operation Kingfisher, next week.

Finance minister Sajid Javid said the global context was challenging but the fundamentals of the British economy were strong. With the blame game between the European Union and the United Kingdom in full swing, the chances of the two sides renegotiating the Irish backstop appears slim; instead preparations for a worse case scenario, no deal Brexit are being prioritised.

Most economists think that a no-deal Brexit would lead to a deep recession; even Brexit's most passionate supporters say it would be disruptive in the short-term.

Data released from Germany on Friday showed that exports fell 8pc in the 12 months to June per cent from the same month in 2018, likely putting Europe's largest economy on track to show an economic contraction when its gross domestic product numbers are released next week.

The pound tanked on Friday morning, falling 0.4% against the dollar and adding to its 4.5% fall over July and August.

London-based Capital Economics expects the British economy to be helped by a return to work at vehicle factories that had shuttered and therefore to avoid a technical recession, which is two consecutive quarters of negative growth.

It came after a boost to growth in the first three months of 2019 because of Brexit stockpiling.

The fall in GDP was driven by a fall in manufacturing after a strong start to the year, with production brought forward ahead of the UK's original departure date from the EU.

Manufacturing recorded its highest pickup since the 1980s between January and March.

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The ONS said companies had been building up additional goods in the first quarter in anticipation of a March Brexit.

"If it comes to no deal, it's not anything that I'm frightened of, I'm not anxious about, I think we will be ready for it, we will get through it, and we will come out stronger and even more resilient", Javid told Sky. Experts expected growth to be flat.

'But what is most important to me, especially as Chancellor, is that our economy remains strong and we are actually, in terms of fundamentals, one of the strongest economies in the developed world'.

The employers' body, the CBI, said the contraction was "concerning".

"Time is of the essence".

"The latest data reveal an economy in decline and skirting with recession as headwinds from slower global economic growth are exacerbated by Brexit-related paralysis", said IHS Markit economist Chris Williamson.

The sector was also weighed down by a drop in transport equipment, which was 5.2% lower due to annual vehicle factory closures being brought forward from summer to April, as companies planned for possible Brexit disruption.

"Two weeks into Boris Johnson's hard Brexit government and we are now officially halfway towards a recession", Labour MP David Lammy tweeted.

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