Economy hit by car slump

THE economy shrank by 0.4pc in April as car makers stopped production due to Brexit.

It was the sharpest monthly decline for three years, driven by a steep fall in manufacturing.

The UK had been due to leave the European Union on March 31, and several large car firms – including BMW and Jaguar Land Rover – shut their factories in the immediate aftermath of the deadline so that they could avoid disruption.

Although Brexit has been delayed until Halloween, the shutdowns went ahead anyway. It led to a dramatic fall in the number of vehicles produced.

Meanwhile, activity earlier in the year had been boosted by manufacturers of all kinds stockpiling goods to avoid disruption.

When Brexit was delayed, this stockpiling stopped.

This toxic combination led to a 4pc fall in manufacturing, according to the Office for National Statistics – the biggest drop since 2002.

Experts warned against reading too much into the monthly economic figures, which are prone to wild swings. Ruth Gregory of research consultancy Capital Economics said the economy would have shrunk even without the stockpiling and the shutdowns, and that there could be a more sustained fall in activity.

Rob Kent-Smith, of the ONS, said: ‘Growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.’