Re-opening of UK car manufacturing operations trigger return to growth but Ellis Marshall Global analysts warn of possible contraction in Q2.
Anticipating possible disruption during the original Brexit period, a number of UK car companies chose to temporarily shut down their operations in April, causing the economy to contract. After the UK’s departure from the EU was delayed, car manufacturers reopened and triggered the modest return to growth.
However, Ellis Marshall Global analysts reported that levels of car production are still relatively low when compared with the first quarter of this year and June’s figures will need to show strong growth to stave off contraction in the period from April to June.
Analysts at Ellis Marshall Global have expressed concern that the UK economy may not fare well during the second quarter of this year. Disappointing sales figures, recently released by the Office of National Statistics, indicate that the UK economy is slowing as consumers grow more reluctant to spend due to Brexit uncertainty.
If the British economy does contract in the second quarter, it will mark the first quarterly contraction in more than seven years. Although single month data can be unreliable, Ellis Marshall Global analysts say that rising uncertainty over the eventual outcome of Brexit combined with a global economic slowdown could certainly lead to second quarter contraction.