Latest GDP tracker
Economic growth grinds to a halt
- Latest ONS data published this morning indicates that the UK economy contracted by 0.2 per cent in the second quarter of 2019, partly due to less inventory accumulation than in the first quarter. This outturn was a little weaker than the 0.1 per cent fall in output that we had forecast last month.
- Recent surveys suggest that output was flat in July, with consumer-led service sector expansion being offset by further contractions in manufacturing and construction. If these trends continue, GDP will grow by around 0.2 per cent in the third quarter (figure 1). That would mean that output is flat throughout the middle of this year.
- Nevertheless, quarterly data is likely to be volatile throughout the year and, with little positive momentum in the economy, there is a significant risk that output falls again in the third quarter. In that case the economy would be in a recession that began in April.
Dr Garry Young, Director of Macroeconomic Modelling and Forecasting, said “Economic growth in the United Kingdom was negative in the second quarter of 2019 and is set to remain weak in the third quarter in the face of a global slowdown and continuing Brexit-related uncertainty. Our latest estimate implies that there is a significant risk that the economy is already in a recession that began in April, and the clear possibility of a more material downturn should there be a no-deal Brexit.”