Investment in United Kingdom

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United Kingdom - Investment

The economy contracts sharply in April amid plunging car production

According to monthly GDP data released by the Office for National Statistics (ONS), economic activity fell 0.4% in April over the prior month in seasonally-adjusted terms, down from March’s 0.1% contraction. In the February-April period, growth clocked 0.3%, down from the 0.5% expansion in January-March. Figures for both April and February-April were weaker than markets expected.

April’s poor showing was driven by an ebbing impact from stockpiling and lower car production, as several car manufacturers temporarily closed their plants in anticipation of the UK’s exit from the EU at end-March. However, car production should rebound in May, supporting the economy.

Looking beyond the current Brexit-driven volatility of the monthly data, James Smith, an economist at ING, commented: “The wider growth story continues to look fairly bleak. While consumer spending may be a little stronger given the modest improvement in real wage growth, investment is likely to continue falling over the summer as Brexit uncertainty weighs on decision-making.”

The economy is set to perform poorly in Q2 as the stockpiling effect unwinds. In the second half of the year, growth will likely be mild amid elevated political risk, stemming from the possibility of a no-deal Brexit or a general election. The Central Bank expects the economy to expand 1.5% in 2019 and 1.6% in 2020. FocusEconomics panelists see GDP expanding 1.3% in 2019 and 1.4% in 2020.

United Kingdom - Investment Data

2013  2014  2015  2016  2017  
Investment (annual variation in %)3.4  7.1  2.8  1.8  4.0  

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United Kingdom Facts

Bond Yield0.84-3.04 %Jun 13
Exchange Rate1.27-0.35 %Jun 13
Stock Market7,369-0.26 %Jun 13

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