U.K. Economy Shrank in Month After Brexit, Niesr Estimatesby
Says GDP declined 0.2% in July, sees 0.2% contraction in 3Q
Sees around an even chance of recession by end of next year
The U.K. economy shrank in the month after Britain voted to leave the European Union, according to the National Institute of Economic and Social Research.
Growth probably slowed to 0.3 percent in the three months through July from 0.6 percent in the second quarter, the London-based think tank said in a statement Tuesday. That suggests gross domestic product contracted 0.2 percent in July alone.
The forecast indicates a “marked economic slowdown,” said James Warren, a research fellow at Niesr. The group predicts the economy will shrink 0.2 percent this quarter, with about an even chance of a technical recession -- or two consecutive quarters of falling output -- by the end of 2017.
In forecasts released earlier this month, Niesr said growth will likely slow to 1.7 percent in 2016 and 1 percent in 2017. The Bank of England sees growth of just 0.8 percent next year. It published new projections last week as it cut its benchmark interest rate for the first time in more than seven years.
Early indicators suggest the fallout from the June 23 Brexit vote could be substantial, with surveys of consumer confidence and business sentiment all declining.
Momentum was slowing in the run-up to the referendum. Official figures Tuesday showed industrial production barely grew in June as manufacturing declined for a second month.