Brexit

Even Before Brexit, The British Economy is Near Recession

JM Ashby
Written by JM Ashby

Some economists recently speculated that the British economy could already be in a recession that simply hadn't shown up in official reports yet, but we now have those reports and it appears they were correct.

The British economy shrank (-0.2 percent) for the first time in seven years during the second quarter and it's the underlying circumstances, along with factors that were keeping the economy afloat in the first place, that should be particularly worrying.

From BBC:

The surprise decline came after Brexit stockpiles were unwound and the car industry implemented shutdowns.

Rob Kent-Smith, head of GDP at the [Office of National Statistics], said manufacturing output fell and the construction sector weakened.

The economy had shown 0.5% growth in the first quarter after manufacturers' stockpiling ahead of Brexit helped to boost output, when the manufacturing sector recorded its biggest quarter rise since the 1980s.

The ONS said GDP had been "particularly volatile" so far this year because of the changes to activity sparked by the original Brexit date of 29 March.

If the economy only grew by 0.5 percent during a quarter when manufacturing saw its best showing in over 30 years, that should be especially alarming given that the Brexit hasn't even happened yet and, when it does, it's going to lead to a more significant slowdown in manufacturing than the economy is seeing right now.

Britain's service sector was also flat during the second quarter of the year and that too will be diminished by the Brexit as a significant portion of Britain's labor force and consumers will no longer enjoy freedom of movement between Britain and mainland Europe.

Virtually all of the underlying factors that have weakened the British economy will be exacerbated by a Brexit even if it were a soft Brexit

Chancellor and Boris Johnson toadie, Sajid Javid, whistled past the graveyard when he spoke to reporters this morning.

Mr Javid told the BBC: "I am not expecting a recession at all. And in fact, don't take my word for it. There's not a single leading forecaster out there that is expecting a recession, the independent Bank of England is not expecting a recession. And that's because they know that the fundamentals remain strong."

Javid also recently boasted that the British economy is strong enough to adsorb the impact of a hard Brexit, but the economy is shrinking before the Brexit even happens. So, you know, you can take Javid's word for what it's worth which is basically nothing.

It really gives me no pleasure to watch the British government be overrun by Trumpian snake oil salesmen.

  • muselet

    A sane government would be running around with its hair on fire after being told the economy was this soft.

    Instead, Sajid Javid is indulging in happy talk while Boris Johnson is bound and determined to make a Brexit happen, no matter what.

    Historians of the future will look back on this period and scratch their heads in bewilderment.

    –alopecia

    • Tony Lavely

      “Historians of the future will look back on this period and scratch their heads in bewilderment.”
      Depends a lot on who remains to write the histories.