Chancellor Javid says he is 'not expecting a recession'

Pound falls in wake of GDP release

Pound falls in wake of GDP release

Britain's new finance minister, Sajid Javid, said he did not think Britain's economy would fall into a full-blown recession, after official figures showed the economy contracted for the first time since 2012 during the three months to June.

"This is a challenging period across the global economy, with growth slowing in many countries", British Chancellor of the Exchequer Sajid Javid said.

Mr Javid told the BBC: "I am not expecting a recession at all".

"And in fact, don't take my word for it". "There is not a single leading forecaster out there that is expecting a recession".

'And you know why they're not?

Increased stockpiles have been partially used up in the second quarter according to the ONS, while automotive companies have brought their annual shutdowns forward to April as part of contingency planning for Brexit.

The ONS said companies had been building up additional goods in the first quarter in anticipation of the original Brexit deadline, set in March.

The British economy is not expected to fall into recession - commonly identified as two quarters of economic contraction - just yet as vehicle manufacturers will be operating in August, having brought forward their maintenance period earlier in the year.

Private-sector business surveys have shown the manufacturing and construction sectors both contracted in July, while the larger services sector eked out only modest growth.

"Total business investment is down as the stockpiling "bounce" from Q1 faded, having a more severe impact than anticipated", he added.

Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain into a recession, roil financial markets and weaken London's position as the pre-eminent worldwide financial center.

The UK economy is not alone in seeing shrinkage at this time.

The pound is now down by 0.3 per cent against the euro and 0.25 per cent against the USA dollar, after United Kingdom economic growth came in significantly lower than expected.

"But the fundamentals of the British economy are strong. Unless the chancellor steps in imminently with radical action, we could be heading for a chaotic autumn - and a very long winter", said the FSB's policy and advocacy chairman, Martin McTague.

Looking beneath the headlines of the second quarter numbers, household consumption rose by 0.5pc after 0.6pc in the first, backed up by wages that are growing 3.4pc annually and an unemployment rate of just 3.8pc, well below the 7.5pc in the eurozone.

"While it's absolutely right the government looks at those who may experience some bumps in the road initially, and see how we can help them through it, it's also my aim to make sure that we can maximise the opportunities for every sector of the economy as well".

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