A “dramatic” fall in car production and an easing of stockpiling by manufacturers saw Britain’s economy shrink by 0.4% in April, according to the UK’s Office for National Statistics.
Car manufacturing plants planned shutdowns ahead of the UK’s planned March exit from the EU and increased their stockpiling, which was designed to deal with what they thought would be a violent disruption of supplies in a cliff-edge scenario.
Car manufacturing dropped by 4% in April, while the Society of Motor Manufacturers projects an annual drop of 10% as a best-case scenario.
Factories are, at present, using stockpiled reserves while some are undergoing summer maintenance closures. Fears are now emerging that subdued growth could dominate 2019 against a projection of 1.3% GDP growth this year. This also calls into question projections of 1.5% growth in 2020.
The problem at hand is not merely car manufacturing.
Brexit uncertainty has caused a 30% contraction in foreign direct investment in the three years since the referendum, according to the fDi Markets cross-border investment database.
Greenfield investment appears to be massively diverted from the UK, where it saw a €32bn drop, to other EU member states. The telecommunications sector alone has seen a 28% drop in investment, the FT report.