Britain’s GDP is falling for the first time in nearly seven years. Finance Minister Sajid Javid sees no cause for concern, but Prime Minister Boris Johnson’s comments on Brexit do not inspire much hope for the economy.
During the April-July period, UK gross domestic product fell 0.2 per cent, compared to the first quarter of the year. The decline was the first since the end of 2012, according to the British Statistics Center ONS.
At most, most analysts expected a recession, and that GDP would remain unchanged. Even during the January-March period, the British economy grew by 0.5 per cent.
Double the pound instantly
The unexpected numbers immediately weakened the British pound. Regarding both the euro and the US dollar, the British pound fell on Friday to its lowest level in two years.
Finance Minister Sajid Javid still doesn’t think there is anything to worry about.
Javid says this is a challenging period for the entire global economy, with growth slowing in many countries.
The British economy is basically strong. Wages are rising, employment is at a record level, and our growth this year is expected to be higher than in Germany, Italy or Japan.
shaky third quarter forecast
Economists are not as optimistic as Secretary Javid.
– There is no doubt that the economy is immediately trampled on, analyst Mike Jackiman tells Reuters.
According to Jackman, the ongoing confusion over Brexit and the global downturn means the UK economy is “balancing on the edge” during the third quarter. Two quarters of declining growth numbers would amount to a recession.
By the end of October, Britain should leave the European Union as planned. According to analysts, the election of Boris Johnson as prime minister in July has increased the likelihood that the resignation will take place without any agreement.
Kallum Pickering at Berenberg Bank believes that uncertainty will continue through August and October. Fears of a no-deal Brexit, and new elections possibly to follow, are making investors especially wary.
Originally, Britain would have left the European Union on March 29. However, as the British Parliament was unable to agree on the withdrawal agreement with the Union, the withdrawal date was pushed back by six months.