UK Economy Shrank 0.4% in April as Brexit Hits Industry
At 10.30am this morning, economic indicators coming from the UK revealed that Britain’s economy has suffered its worst month in three years as car factories shut down in case of a hard Brexit
The slide in growth in April shows that Brexit uncertainty is hurting the UK economy, despite a resilient start to the year fuelled by Brexit stockpiling efforts.
Last week we saw the first red signs following gloomy reports on the manufacturing and construction industries. Following a positive first-quarter mainly driven by an increase in inventory build-up, Q2 2019 is proving to be rather disappointing.
The numbers confirm that the UK economy shrank by 0.4% in April, the weakest monthly growth rate in three years. The ONS attributed the decline to a “dramatic fall in car production” amid uncertainty about Brexit policy.
This will come as a blow to the government who has been distracting the public with vastly inflated employment statistics. The real news is that the British manufacturing sector has recently introduced tens of thousands more people to unemployment, which is set to be reflected elsewhere in the economy in the coming months.
There is No Way of Whitewashing the Facts
Although it may be a delicate balance for the government as it stumbles towards electing a new leader whilst managing (or not) Brexit, they don’t seem to help themselves when it comes to public perception. Despite the fact the majority of the British public know exactly what’s it’s like to live in austerity, the government maintains its stance that there is none.
Employment figures are always skewed by Zero Hours Contracts which are universally seen as only ever benefiting an employer. However, the fact of the matter is that more people have less money in their pockets than ever before and yet, we’re told the figures say otherwise.
But do they?
All analysts know about the correlation – or trade-off – between employment and correlation. The general rule of thumb is that when there are high levels of employment, inflation increases. This is naturally because more people have disposable income driving up prices for consumer goods, etc.
According to the British government, employment is booming in the UK, “with more people in work than in the past forty years”. So it would be natural to expect that inflation is increasing very rapidly right?
See for yourself:
Not exactly an inflationary environment considering employment is apparently higher than it was in the mid-1970s when inflation peaked at an astonishing 25%.
I hope I’ve illustrated that it simply isn’t possible to deny the evidence of economics. No matter how persuasive the rhetoric of those in power telling us everything is dandy and that most of us are in secure employment than ever before, the truth will always out.
How to Keep your Savings and Investments Safe Whatever Happens
Investor Live was founded with the mission of providing information and resources to help normal people save and invest their money wisely. Retail investors are fortunate to have the opportunity to invest in big assets without taking all the risk on themselves as sole owners.
We always recommend products that give you fixed returns which is never more important than when financial markets are shaky. Although you won’t earn the returns you will for a high-risk opportunity, you at least know you are not likely to lose all your money.
Preferably, you want to keep your money locked into an instrument that is going to give you exactly what you calculate it to when you invest your money. Products with terms of around 12-24 months that have underlying real estate assets are the best bet for keeping your hard-earned capital as safe as possible as the post-Brexit dust settles, (God willing).
About the Author
Amanda Wright is a former risk analyst at Bankers Trust, with specific experience of mergers & acquisitions and corporate finance. As a contributor to Investor Live, Amanda provides valuable insights into the technicalities of fundamental analysis in a way that is easy to understand, to provide retail investors with the tools to make considered investment choices.