The UK economy is displaying concerning signs of contraction as recent data released by top economists warns of a potential ‘no-deal Brexit recession’ if the country exits the European Union on October 31st.
The Chartered Institute of Procurement and Supply (CIPS) has revealed that the economy experienced its first quarterly contraction in almost seven years, with many already attributing blame to Brexit uncertainty and political instability, which has caused a sudden halt in business activity across the nation.
Sector By Sector
Several industries have been hit hardest by this economic downturn. The services sector, which accounts for four-fifths of the UK economy, has stagnated in growth with minimal change reported from the previous quarter.
The manufacturing and construction industries, though smaller, have also raised concerns as their growth has decreased.
Recent figures suggest that the economy shrank by 0.1% in the previous quarter, and although this may seem like a small figure, it can have disastrous knock-on effects for British industry. Other significant industries like finance, transport, and telecommunications have also experienced a sudden slowdown in activity.
The Bank of England has warned investors that the slight rise experienced in early March, which saw the first quarter experience a slight increase, was not expected to continue and was primarily due to the bulk-buying of raw materials in the run-up to the original March deadline for Brexit.
Many believe that continued negative growth in the third quarter could see the country heading for another significant recession before October’s end.
The last time GDP shrank like this was in the last three months of 2012, when Britain was still attempting to recover from the recession with Conservative policies of austerity.
However, experts are now suggesting that this sudden decline in growth is actually the worst economic performance of the decade, thanks to Brexit-related uncertainty for both domestic and international companies.
Nevertheless, the UK economy is not the only one affected by this situation.