A final read today of the UK’s growth rate for the second economic quarter will confirm that the economy posted Q2 contractions, the first such decline since 2012.
Estimates show that the economy shrank by 0.2%, with manufacturing taking the biggest hit, contracting by 2.3%. Information on Q3, which spans from July to September, is set to be released in the following weeks. The outlook is mixed.
Should the third quarter also show economic contraction, the UK economy will officially be in a recession. The uncertainty surrounding Brexit likely spooked manufacturers into stockpiling materials in the event that the UK leaves the EU without a deal. This might actually provide a slight boost to the economy up until the October 31 leave date, but any gains will be fleeting and entirely superficial.
Ultimately, it is unlikely that the UK will post losses in the third quarter, meaning it will avoid a technical recession. However, the economy rests on extremely weak ground. Brexit opacity will hinder growth into the fourth quarter. Unless the government shows genuine signs of trying for a deal, economic instability and further contractions can be expected.
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Max is Foreign Brief's Chief Executive Officer. A Latin America specialist, Max is an expert in regional political and economic trends, focusing particularly on the Southern Cone.