Brexit hazard warning lights: UK economy contracts for first time since 2012

Pound falls in wake of GDP release

Brexit hazard warning lights: UK economy contracts for first time since 2012

"We're seeing volatility in the figures and one of the best ways to actually end this volatility is to bring certainty around Brexit and make sure we leave on 31 October".

Johnson has threatened that, if the bloc refused to start again on the deal, he would take Britain out on October 31 without any deal - something which many economists and investors say 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 centre.

Many vehicle companies also brought forward their annual maintenance shutdowns to April from later in the year to cushion the potential blow from Britain leaving the European Union without a deal on March 29.

The government's official forecaster last month warned that Britain would slide into a year-long recession should it leave the European Union without a deal.

The latest reading contrasted with 0.5-percent expansion in the first quarter, when activity was boosted by companies stockpiling ahead of Brexit.

Economist Howard Archer said the economy should stabilise once Brexit has been finalised.

Rehan Ansari, head of FX risk management & derivatives at Caxton FX, said: "Today's figures will mount further pressure on the pound as the market evaluates whether this will warrant an adjustment to monetary policy".

Ryanair warned in its half year earnings released late last month that it would look at shutting routes such as London to Glasgow, Edinburgh and Belfast if there were a no-deal Brexit.

PwC senior economist Mike Jakeman said. The company has spent €5m this year on Brexit preparations. The company gets 3pc of its revenue from the United Kingdom and CEO Siobhan Talbot told the Irish Independent earlier this year that the issue with Brexit was the "protracted nature of the uncertainty".

Rupert Harrison, a fund manager at BlackRock, and analysts at Morgan Stanley have also predicted that the pound could trade level with the dollar in the event of a no-deal Brexit, although a Bloomberg survey this month estimated the pound would slide less far to $1.10. Also Friday's figures showed that British consumers remain upbeat as unemployment is at 44-year lows and wages are rising solidly and outpacing inflation.

The statistics office said growth from April through June declined 0.2 percent, continuing a steady decline that followed growth to start the year. Although the fears for the value of the pound are not the only issue being seen by those in the country.

The decline is set to raise alarm that the economy could experience its first recession in a decade.

Gross domestic product shrank by 0.2% in the three months ending in June, the Office for National Statistics said Friday.

Government spending increased by 0.7%. The UK should avoid a recession if expectations of growth in this quarter are fulfilled, but that is not guaranteed.

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