UK GDP contracts for the first time in seven years but no recession – ACCA’s chief economist comments on ONS update

The ONS has announced today the first quarterly contraction in UK GDP for seven years.

Commenting on the update, Michael Taylor, chief economist at ACCA (the Association of Charted Certified Accountants), said: 

‘On the face of it this first contraction in GDP in almost seven years is a surprise But the fall in output in the second quarter is largely due to the impact of the scheduled date of 29th March for the UK to leave the EU. 

‘Some manufacturers, especially carmakers, brought forward their annual shutdowns to April rather than the summer and this contributed to a large drop in manufacturing output in the second quarter. In addition stocks built up in anticipation of a March EU exit were likely run down in the second quarter, dragging growth down further. There is likely to be a rebound in activity in the third quarter and so we do not expect the UK to enter recession, despite fears of this being expressed.  

‘But economic confidence has been dented here in the UK, as our last Q2 edition of our Global Economic Conditions Survey (GECS) showed. The message from the GECS continues to be moderate growth, restrained by stagnant business investment spending held back by Brexit uncertainty. Consumer spending, supported by rising real incomes, will help support modest economic growth in coming months. 

‘As for the global economy, GECS points to a slowing global economy with significant downside risks reflected in weak confidence. The biggest risk to the global economy remains a significant further escalation in the US-China trade war. A sharp slowdown in China and a no deal Brexit are additional downside risks.’

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About ACCA

ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants, offering business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management. 

ACCA supports its 219,000 members and 527,000 students (including affiliates) in 179 countries, helping them to develop successful careers in accounting and business, with the skills required by employers. ACCA works through a network of 110 offices and centres and 7,571 Approved Employers worldwide, and 328 approved learning providers who provide high standards of learning and development. 

Through its public interest remit, ACCA promotes appropriate regulation of accounting and conducts relevant research to ensure accountancy continues to grow in reputation and influence.

ACCA has introduced major innovations to its flagship qualification to ensure its members and future members continue to be the most valued, up to date and sought-after accountancy professionals globally. 

Founded in 1904, ACCA has consistently held unique core values: opportunity, diversity, innovation, integrity and accountability.