Chancellor claims the economy is growing... on the day figures showed it’s shrinking
- Credit: PA
The chancellor has claimed that the economy is growing - on the day figures showed it has shrunk for the first time since 2012.
Gross Domestic Product (GDP) decreased by 0.2% between April and June, according to the Office for National Statistics (ONS).
The economy was weaker than both market expectations and the Bank of England's latest forecasts, which had pointed to flat growth in the quarter.
The pound dropped on the news and declined further over the morning. It was trading at 1.206 US dollars by Friday lunchtime, its lowest point since early 2017.
Rob Kent Smith, head of GDP at the ONS, said: "GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter.
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"Manufacturing output fell back after a strong start to the year, with production brought forward ahead of the UK's original departure date from the EU.
"The construction sector also weakened after a buoyant beginning to the year, while the often-dominant service sector delivered virtually no growth at all."
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The contraction compares to 0.5% growth in the previous quarter, when the highest quarterly pickup in manufacturing since the 1980s was recorded.
The ONS said companies had been building up additional goods in the first quarter in anticipation of a March Brexit.
But with the original deadline later called off in favour of an October exit, firms which spent the first three months of the year stockpiling look to have been using up their stores before building up new reserves.
Boris Johnson's chancellor Sajid Javid, however, toured television studios to claim that the British economy is "growing" and "strong".
Javid said he believed the UK economy would emerge even stronger and more resilient if Britain leaves the EU in the autumn without a deal in place, despite claiming leaving the EU would be a rather foolish act of self-harm durign the EU referendum campaign.
"Throughout government, we are doing everything we can to prepare for a no-deal exit. If it comes to no-deal, it is not anything I am frightened of," he told Sky News.
"I am confident that if that is what it comes to, we will not just get through it, the UK will end up stronger and more resilient. It is something that we can deal with."
And in an interview with ITV News he baffled the report by claiming: "Our economy is growing!"
He continued: "You've taken a single quarter and you have extrapolated that for the rest of the year. When you look at all major forecasters, the IMF says that we will not only grow this year, but we will grow faster than Germany, Italy and Japan."
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