Britain's economy contracted for the first time in seven years last quarter, according to official data published Friday, as the impact of the country's decision to leave the European Union, and the government's threat to do so without a trade deal, takes its toll.
U.K. GDP shrank 0.2% over the three months ending in June, Britain's Office for National Statistics said Friday, pulling year-on-year growth down to 1.2% form a prior reading of 1.8%, The quarter-on-quarter decline was the first since 2012, the ONS said, while the annual growth rate was the weakest since August 2013.
"There is evidence that stockpiling was taking place in the first quarter of the year, which provided a boost to GDP, with the latest figures showing that these increased stock levels were partly run down in Quarter 2 2019," the ONS said. "Furthermore, it was also reported that a number of car manufacturers had brought forward their annual shutdowns to April as part of contingency planning. Monthly estimates published today show that GDP growth was flat in June 2019, while there were some downward revisions to earlier months in the quarter."
The pound fell to a session low of 1.2090 against the U.S. dollar following the data release, extending its decline since the appointment of Prime Minister Boris Johnson on July 23 to 3.13%
The pound was also pressured by a report from the Financial Times that Prime Minister Johnson will call for a general election on November 1, the day after Britain is scheduled to leave the European Union regardless of whether it strikes a bespoke deal with its biggest trading partner.
Johnson may be forced to an earlier poll, however, if opposition Labour party lawmakers join Conservative party rebels, and those that support Britain remaining in the EU, in a no confidence when parliament returns from it summer recess in September.