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U.K. Economy Shrinks as Auto Production Slumps
A sharp drop in vehicle production in March caused the British economy to shrink 0.4% between March and April, according to the U.K.’s Office for National Statistics.
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A sharp drop in vehicle production in March caused the British economy to shrink 0.4% between March and April, according to the U.K.’s Office for National Statistics.
Carmakers in the U.K. stockpiled inventory in February, then slashed production in March by nearly 50%. The strategy was intended to minimize expected supply chain disruptions resulting when the U.K. exited the European Union at the end of March.
But the U.K. postponed Brexit at the last moment until the end of October. ONS notes that much of Britain’s manufacturing base saw a similar spurt in activity ahead of the original March exit date. Now the resulting inventories are being drawn down, which deters a rebound in production.
Economists predict that continued uncertainty about Brexit will saddle U.K.’s economy with “more subdued” growth through the remainder of 2019, BBC News reports.
Some analysts predict that Britain’s gross domestic product will expand no more than 1.5% this year. The Society of Motor Manufacturers and Trades estimates that vehicle production in the U.K. this year will fall 10% compared with 2018, when output slid 9% to 1.52 million units.
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