The British economy shrinks for the first time in seven years – and the pound weakens foreign

Britain's GDP fell for the first time in nearly seven years. Chancellor of the Exchequer Sajid Javid sees no cause for concern, but Prime Minister Boris Johnson's comments on Brexit offer little hope for the economy.

During the period from April to July, Great Britain's GDP fell by 0.2 percent, compared to the first quarter of the year. This decline is the first since the end of 2012, according to the British Bureau of Statistics.

At most, most analysts were expecting a recession, and that GDP would remain unchanged. Even from January to March, the British economy grew by 0.5 per cent.

The pound weakened immediately

The unexpected numbers immediately weakened the British pound. Against both the euro and the US dollar, the pound fell to its lowest level in two years on Friday.

Finance Minister Sajid Javid still does not think there is cause for concern.

– This is a challenging period for the entire global economy, with declining growth in many countries, says Javed.

– Basically, the British economy is strong. Wages are rising, employment has reached a record high, and our growth this year is expected to be higher than that of Germany, Italy, or Japan.

The third quarter is expected to be fragile

Economists are not quite as optimistic as Minister Javid.

– There is no doubt that the economy is on the rise, analyst Mike Jackman of PricewaterhouseCoopers tells Reuters.

According to Jackman, continued Brexit uncertainty and the global slowdown mean the UK economy is “balancing on a knife-edge” in the third quarter. Two quarters of low growth numbers would be tantamount to a recession.

The United Kingdom is scheduled to leave the European Union next October. According to analysts, the election of Boris Johnson as Prime Minister in July increased the chances that withdrawal would take place without an agreement.

Calum Pickering of Berenberg Bank believes uncertainty will persist through August to October. Fears of Brexit, possibly followed by new elections, are making investors particularly cautious.

Originally, the United Kingdom was scheduled to leave the European Union on March 29. But when the British Parliament was unable to agree on a withdrawal agreement with the Union, the withdrawal date was brought forward by half a year.