ONS monthly GDP estimate – comment

“Latest figures from the Office for National Statistics show that the British economy contracted by 0.2% quarter on quarter in April-June, the first contraction since late 2012. In the immediate aftermath of the announcement, the pound lost further ground against the US dollar and the euro.

“Today’s figures are not a surprise as stockpiling activity ahead of the original Brexit date on 29th March had artificially inflated the comparison base in Q1. Also, the wider European region is seeing a slowdown which is adversely impacting on UK growth. Nevertheless, the fact that the UK is potentially heading towards a recession is unwelcome news for businesses who are already struggling, according to several high frequency indicators like the latest Purchasing Managers Index for the Construction Sector

“Dun & Bradstreet’s latest proprietary data shows that in Q2, the number of business failures remained fairly stable for the economy as whole. However, five out of 14 sectors reported a rise in corporate liquidations, including the construction sector and personal services. All in all, we are maintaining our current deteriorating outlook for the UK and are considering a downgrade of the country’s risk rating (which would push the UK from the ‘low risk’ to the ‘slight risk’ category) should the risk of a no-deal Brexit increase further over the next weeks.”

Markus Kuger, Chief Economist, Dun & Bradstreet