The BBC reports UK Economy Shrinks for the First Time Since 2012.
Sajid Javid , the chancellor, told the BBC that he does not expect the UK to slide into recession but I strongly disagree.
The ONS [Office of National Statistics] said GDP had been “particularly volatile” so far this year because of the changes to activity sparked by the original Brexit date of 29 March.
The statistics body said its latest figures showed that those increased stockpiles had been partly run down in the second quarter and that a number of car manufacturers had brought forward their annual shutdowns to April as part of contingency planning, which also hit growth.
Mr Kent-Smith said: “Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK’s original departure date from the EU.”
He added that “the often-dominant service sector delivered virtually no growth at all”.
Mr Javid told the BBC: “I am not expecting a recession at all. And in fact, don’t take my word for it. There’s not a single leading forecaster out there that is expecting a recession, the independent Bank of England is not expecting a recession. And that’s because they know that the fundamentals remain strong.”
UK vs Germany, Italy, France Spain
Germany, the Eurozone’s largest economy is also in contraction.
Italy, the Eurozone’s third largest economy is flirting with contraction.
Brexit Will Take a Toll
It’s debatable which economies will suffer more from No Deal, but they all will suffer substantially. I propose the EU will suffer more, as noted in Eight Reasons the EU Will Suffer Far More Than UK in Brexit.
What’s not debatable is the idea that Brexit will take a significant short-term toll on both the UK and the Eurozone economies.
Manufacturing Recession Has Arrived
Meanwhile, thanks partially to Trump’s trade wars, thanks partially to inept policy by central banks, and thanks partially to simple economic exhaustion, a Global Manufacturing Recession Started.
Brink of a Global Recession
A tipping point has been breached. A global recession awaits. The US will not be immune.
Those who expect a warning period need to think again. For discussion, please see Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?
Mike “Mish” shedlock
Somehow, Brexit (or any other destruction of bloated and remote government) seems to me a positive element in fundamental economics. Even in the US, a quick contraction of the EPA’s burdensome and frequently absurd rules, would probably do lots for the revival of our economy
“The UK economy shrank by 0.2% between April and June. It won’t stop there.”
Global recessions don’t stop with one country.
“A tipping point has been breached. A global recession awaits. The US will not be immune.”
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ONCE AGAIN, you blame Trump’s trade wars, central banks, and simple economic exhaustion (whatever that is), BUT FAIL TO MENTION THE PRIMARY CULPRIT – GOVT LARGESS (taxes, fees, penalties, fraud, corruption, etc.).
The anti-establishment movements across the globe, including Brexit and Trump, have their roots in govt largess, which is taking more and more out of the pockets of the 99%. Since govt never looks in the mirror and reforms, the trend continues through trade and currency wars until we reach civil wars and the ultimate distraction – world wars.
The greatest tell of a German recession is their stock market (DAX) has not made a new, all-time, high in the last 18 months. Its performance is lagging US and UK markets as well. The financial markets forecast a German recession.
Italy’s government (maybe the current one, more likely the next one) has to decide whether to implement a huge EUR23 billion VAT tax increase at Brussels behest, or they must vote to “temporarily postpone” it again. Such a large tax, if implemented, would decimate Italy’s economy (not that it is in great shape now, but it would be a lot worse). The “new” Italian government, even if it is a different combination of existing coalition, won’t last long if they let the tax increase happen. Salvini’s party seems likely to win, and they have been pushing for a new Italian Lira, an obvious prelude to ditching the Euro.
Germany’s economy is no longer able to subsidize Brussels, even if German voters were as pliable as Angela Merkel. England will be leaving the EU October 31st. France is being ruled by a brutal dictator who has monsieur l’argent shooting at French citizens — hardly a stable situation in France.
Mish may be right about an EU recession coming soon. Given that the EU has been unable to pay its bills now, when the EU is not in recession, how strained will things get when Germany has a recession?
They have done some calculations. Germany can stimulate to 116Bn Euro and still meet 3% rule.
No one else in the EU is concerned about the 3% rule, nor does Brussels have any enforcement mechanism. I don’t think this is a limiting factor for Germany.
Germany being either in / near a recession means that Germany has domestic issues to deal with. And there is the Deutche Bank bailout matter, even if they call it something else for political reasons.
Not sure Germany actually has a “spare” EUR 116B, but if so they have far more pressing spending initiatives (domestic). The clobbering Merkel / CDU took in recent elections suggests that voters have no appetite for Brussels nonsense.
The EU is collapsing. Maybe Italy leaves next (among anchor countries). Maybe Germany. France seems like it might have a civil war between Paris and everyone else.
The one thing the Germans have is money, and lots of it. Government surpluses ad nauseam forever, balance of payment surpluses that beggar belief. The Germans do not like credit they save and pay cash for most of their purchases. They take a different lesson from the Deutche bank debacle, they say see what happens if you follow the irresponsible Anglo-Saxon way. The one thing that surprises me in a nation that has sound money as a religious belief is that no political party is running on the basis of a return to sound money and to hell with casino capitalism.
Its always funny to read all the people with supposedly no money who are 100% certain that the other guy has LOTS of money.
Germany may have money (debatable), but its already earmarked for fixing the long list of things Angela Merkel smashed on the alter of Brussels… Deutche Bank being only exhibit 1 on a very very long list.
Anglo-saxon pensions are insolvent because too many people in England and the States think that money is available to spend — like they don’t see it as already allocated to meet a firm obligation. Germans lived through the Wiemar prelude to Bernanke, followed by the national socialist party (aka the nazi party). That makes them very suspicious of financial hucksters who think there is lots of free money sitting around waiting to be spent on some politcal boon-doggle.
Are you agreeing with me or what? Wiemar ??? prelude to Bernanke? You write in a very confused manner.
The Germans do NOT have the money to prop up the EU.
No one supports the EU unless they are a net recipient of funds. Everyone wants to get money out, and everyone figures the other guy is going to pay in.
That is why England is leaving, your nickname not withstanding. That is why the EU will fail. Everyone thinks the other guy is going to pay. Not a new scam. It never works
Are you suggesting that Scotland, Wales and Northern Ireland are staying? If you can’t get the country’s name right what is the use of you commentating?
I said England is leaving.
You should understand that all of great britain (lower case letters) including Scotland and Northern Ireland is smaller than the US state of Colorado. Colorado isn’t even the largest state in the US. The internet reports there are 11 US states each of which are bigger than all of Great Britain.
England is leaving, as in the whole country. For that matter, I think its only a matter of time before other anchor countries (Germany and Italy) leave the EU also. France may break up into civil war, or it might leave.
Anyone who has visited the continent knows the cultures of France, Germany and Italy are vastly different. There is no european union in reality.
I am British, I am certainly not English.Your insistence that England is the whole country shows how misinformed you are. I remember 1968, now that was a real revolution in France. The yellow jackets never gained a critical mass and are now something of a joke.
While bickering over trivia, you somehow both missed the bigger picture. One of you (avid remainer) even has an ID broadcasting how much you can’t see the forest from the trees.
England, and all its irrelevant subdivisions, will be leaving the EU whether you like it or not.
England, and all its irrelevant subdivisions, will not be the only departure from the giant parasite in Brussels.
US Ambassador suggesting US forces might move to Poland. That’s a lot of local demand from US base(s) that will move. The reason- Poland meets NATO spending targets, Germany does not and will not until at least 2022.
I reckon Germany will spend big on EU forces but not NATO. Pleasing Macron.
I reckon the Germans don’t have the money to fund NATO or the EU targets (that is what the Europeans called their own light blue helmets in Kosovo).
Everyone in Europe has been promising to increase their military spending for decades. Didn’t happen.
An army run by a committee reporting to a bickering legislature isn’t much of a threat. Try to convince me they will be able to agree on what to order for lunch. Not going to agree on use of force.
Macron is busy using French troops against his own populace.
You can only pull future consumption forward through debt for so long. Longer than I imagined. Lowering interest rates helps for a time, a long time, but it can’t last forever, if saving is a virtue, not the vice it currently is. However, I have been wrong for a long time now.
The market can stay irrational longer than one can stay solvent, as they say. That’s why you take cautious positions that will hopefully gain value if your expectations come to pass, but not excessively risky ones.
If you save in anything the system can control I’m not sure it’s any longer saving in the real sense.
The ba@stards will devalue it or seize it or force it where they want it to go – pensions forced into gov bonds etc. Anything to keep the show on the road.
Should what most of us think as normal or prudent be done the impact will be massive bankruptcy of zombie corporations with all the consequences.
Won’t be allowed to happen. Easier to shear the sheeple.
Cashless societies make great sheep pens.
“You can only pull future consumption forward through debt for so long.”
What a felicitous phrase! Has a bit of a “Through the Looking-Glass” flavor.
When the evidence of your own eyes contradicts official figures then somethings up. I am a cock up theory of history rather than a conspiracy theorist but I really fear that something quite cancerous is is hidden beneath the surface. What could be worse than the crap the great and the good are throwing up already?
Autumn often pulls back the curtain.
I do agree with you…..for once (smile)
To Serve Man – it’s a cookbook!
The solution is obvious: Germany should by buy mucy cheaper American Freedom Gas and kick those 50,000 Russian troops out