MNI DATA IMPACT: UK GDP Contracts in Q2; Hit By Brexit>

By Laurie Laird and Irene Prihoda

     LONDON (MNI) - The UK economy recorded its first contraction since 

the final quarter of 2012, roiled by Brexit-related distortions. 

     The following are the key points from UK Q2 GDP data published 

Friday by the Office for National Statistics.

     -- GDP slumped by 0.2% in Q2, falling far short of analysts' 

expectations and predictions by Bank of England staff. The economy last 

contracted in Q4 2012, then a hangover from elevated activity during the 

London Olympics in the previous quarter. 

     -- A 2.3% plunge in manufacturing erased 0.23 percentage points 

from Q2 growth, courtesy of a 5.2% slump in transport equipment over 

the quarter. That decline was concentrated in April, when automakers 

idled assembly lines in the wake of the original March 29 Brexit date.  

     -- But activity was weak across the board, with business investment 

falling by 0.5%, reversing a 0.4% gain in Q1. Investment has fallen 

over five of the past six quarters. Construction retreated by 1.3%, the 

biggest fall since Q1 2018. 

     -- Household spending remains a bright spot in the economy, boosted 

by continuing labour market strength and a gradual acceleration in wage 

growth. Spending increased by 0.5%, slightly weaker than the 0.6% rise 

recorded in Q1, adding 0.34 percentage points to total growth.  

     -- The Q2 contraction would have been significantly worse, were it 

not for a dramatic narrowing of the trade deficit, which added a 

record-high 3.5 percentage points to growth. Net trade subtracted 2.99pp 

from GDP in the opening months of the year. 

     - Net trade hit a record-high surplus in June of Stg1.779 billion, 

although that was flattered by trade in unspecified goods, largely 

non-monetary gold.  Excluding unspecified goods, net trade recorded a 

shortfall of Stg600 million, the smallest gap since February of 2018.

     - The non-EU trade gap fell to a record-low Stg186 million in June. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]