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| UK economy returns to growth as carmakers end Brexit shutdown | UK economy returns to growth as carmakers end Brexit shutdown |
| (32 minutes later) | |
| The British economy returned to growth in May as carmakers resumed production after shutdowns for the original Brexit deadline. | The British economy returned to growth in May as carmakers resumed production after shutdowns for the original Brexit deadline. |
| Allaying fears of a recession, the Office for National Statistics said UK GDP rose by 0.3% in May from a month earlier, when stoppages at car plants across the country dragged the economy into contraction. | Allaying fears of a recession, the Office for National Statistics said UK GDP rose by 0.3% in May from a month earlier, when stoppages at car plants across the country dragged the economy into contraction. |
| Manufacturers across the country rushed to stockpile goods in the run-up to the original Brexit deadline of 29 March – driving up economic growth – as they braced for disruption to their supply chains from a no-deal departure. | Manufacturers across the country rushed to stockpile goods in the run-up to the original Brexit deadline of 29 March – driving up economic growth – as they braced for disruption to their supply chains from a no-deal departure. |
| Carmakers brought forward their annual maintenance shutdowns to April, which would have been immediately after Britain left the EU, to avoid the potential chaos from border delays at UK ports. | Carmakers brought forward their annual maintenance shutdowns to April, which would have been immediately after Britain left the EU, to avoid the potential chaos from border delays at UK ports. |
| Factory output rose by 1.4% in May after a sharp drop of 4.2% in April, with the ONS finding that a partial bounceback from car production had driven up growth. | Factory output rose by 1.4% in May after a sharp drop of 4.2% in April, with the ONS finding that a partial bounceback from car production had driven up growth. |
| Despite the recovery, economic growth for the three months to May fell to 0.3% from 0.4% in the three months to April, suggesting that UK growth has gradually slowed. The ONS warns that single-month growth figures can prove volatile, preferring to assess the economy over a three-month period. | Despite the recovery, economic growth for the three months to May fell to 0.3% from 0.4% in the three months to April, suggesting that UK growth has gradually slowed. The ONS warns that single-month growth figures can prove volatile, preferring to assess the economy over a three-month period. |
| Gross domestic product (GDP) measures the total value of activity in the economy over a given period of time. | |
| Put simply, if GDP is up on the previous three months, the economy is growing; if it is down, it is contracting. Two or more consecutive quarters of contraction are considered to be a recession. | |
| GDP is the sum of all goods and services produced in the economy, including the service sector, manufacturing, construction, energy, agriculture and government. Several key activities are not counted, such as unpaid work in the home. | |
| The ONS uses three measures that should, in theory, add up to the same number. | |
| • The value of all goods and services produced – known as the output or production measure.• The value of the income generated from company profits and wages – known as the income measure.• The value of goods and services purchased by households, government, business (in terms of investment in machinery and buildings) and from overseas - known as the expenditure measure. | |
| Economists are concerned with the real rate of change of GDP, which accounts for how the economy is performing after inflation. | |
| Britain's government statistics body, the Office for National Statistics, produces GDP figures on a monthly basis about six weeks after the end of the month. It compares the change in GDP month on month, as well as over a three-month period. | |
| The ONS warns that changes on the month can prove volatile, preferring to assess economic performance over a three-month period as the wider period can smooth over irregularities. | |
| The most closely watched GDP figures are for the four quarters of the year; for the three months to March, June, September and December. | |
| The figures are usually revised in subsequent months as more data from businesses and the government becomes available. | |
| The ONS also calculates the size of the UK economy relative to the number of people living here. GDP-per-capita shows whether we are actually getting richer or poorer, by stripping out the impact of population changes. Richard Partington | |
| Rob Kent-Smith, the head of GDP at the ONS, said: “GDP grew moderately in the latest three months, with IT, communications and retail showing strength. | Rob Kent-Smith, the head of GDP at the ONS, said: “GDP grew moderately in the latest three months, with IT, communications and retail showing strength. |
| “Despite this, there has been a longer-term slowdown in the often-dominant services sector since summer 2018.” | “Despite this, there has been a longer-term slowdown in the often-dominant services sector since summer 2018.” |
| Analysts warned the economy could still shrink in the second quarter as no-deal Brexit fears mount, with closely watched surveys of business activity suggesting negative growth of 0.1% in the three months to June. | Analysts warned the economy could still shrink in the second quarter as no-deal Brexit fears mount, with closely watched surveys of business activity suggesting negative growth of 0.1% in the three months to June. |
| Figures from the British Retail Consortium this week showed annual consumer spending growth slowed in June to the weakest rate since records began in 1995. | Figures from the British Retail Consortium this week showed annual consumer spending growth slowed in June to the weakest rate since records began in 1995. |
| The slowdown in Britain also coincides with weaker levels of growth elsewhere around the world as tensions between the US and China drag down international trade volumes. | The slowdown in Britain also coincides with weaker levels of growth elsewhere around the world as tensions between the US and China drag down international trade volumes. |
| Suren Thiru, the head of economics at the British Chambers of Commerce, said: “The continued slowdown on the underlying three-month measure is further evidence that the UK economy is faltering under the weight of relentless Brexit uncertainty and tougher global economic conditions.” | Suren Thiru, the head of economics at the British Chambers of Commerce, said: “The continued slowdown on the underlying three-month measure is further evidence that the UK economy is faltering under the weight of relentless Brexit uncertainty and tougher global economic conditions.” |
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