The Logistics Terminal

Fall in car production impacts UK growth

Fall in car production impacts UK growth

A decline in production of cars in the UK which analysts have called “dramatic” has lead to the economy shrinking across April, according to research figures. The economy contracted 0.4% from the month beforehand, based on information from the Office for Nationals Statistics (ONS). For three months up until April growth slowed to 0.3%.

This is likely due to car factories across the UK closing in preparation for Brexit as many car manufacturers plan to move development elsewhere as a more economical solution that dealing with the consequences Brexit could have for international businesses with bases in the country.

BMW’s Mini factory pushed forward their summer maintenance shutdown which took place in April, as many other manufacturers across the nation also pushed forward their annual stoppages, impacting thousands of jobs across the UK.

The economy saw growth with the Brexit deadline in March, as many firms prepared for the deadline stockpiling goods – uncertain of what the future would entail for the movement and delivery of goods internationally. Raw materials and goods were all taken, in anticipation of delayed journeys when crossing the border.

Once the deadline was extended, the opposite happened. As firms had stockpiled so many parts and good less purchases and sales were made across the country.

Yael Selfin, Chief Economist at accountants KPMG UK spoke on the matter: “The hangover that’s followed the UK’s original exit date is proving stronger than anticipated. Today’s figures signal the UK economy is likely to experience more subdued growth for the rest of the year, marred by Brexit uncertainty.”

ONS statistician Rob Kent-Smith shared his own thoughts: “Growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.

“There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.”