The UK has fallen to the bottom of the G7 growth league table after Brexit uncertainty held the economy back in the spring.
Every other advanced economy performed better than Britain in the second quarter of 2019, a ranking confirmed on Friday when Canada was the last of the seven to report GDP figures for the period between April and June.
Canada topped the G7 with strong growth of 0.9% in the second quarter. The US and Japan both posted solid, if unspectacular, growth of 0.5% and 0.4% respectively.
The UK brought up the rear, after contracting by 0.2% in the second quarter. Germany also shrank, by 0.1%, while France picked up pace with 0.3% growth. Italy stagnated with zero growth.
Back in 2015, the then chancellor George Osborne proudly declared that Britain was “growing faster than any other major advanced economy”, after the UK outpaced the rest of the G7 in 2014. The present chancellor, Sajid Javid, cannot make such a boast when he presents the government spending review next week.
The UK’s second-quarter contraction was partly caused by stockpiling in the run-up to the original Brexit deadline at the end of March. This dragged economic activity forward into the first quarter, meaning GDP rose by 0.5% in the three months between January and March. Car production was also particularly weak, as factories moved their annual summer shutdowns forward to April.
Ruth Gregory, senior UK economist at Capital Economics, said these erratic factors had dragged GDP down in the second quarter. Without them, the UK economy would have posted modest growth.
Gregory predicts the UK will return to growth in the third quarter of 2019, avoiding falling into recession. Companies are likely to be stockpiling again, while the government’s no-deal preparations could also boost growth, she said.
But economic prospects beyond 31 October depend entirely on Brexit.
“If there is a no-deal Brexit, there will probably be a recession at the turn of the year,” Gregory predicted.
Global growth appears to have weakened in recent months as the ongoing US-China trade war hits demand.
Gregory said there had been a slowdown in manufacturing across the world recently. “The big question is whether this weakness spills over to the consumer sector,” she added.
Surveys released this week showed that UK consumer confidence has hit a six-year low, with people becoming more worried about the state of the economy and their own financial wellbeing.
