UK industrial production barely grew in June, after the economy lost speed before the referendum on Brexit. The production increased by 0.1% after declining by 0.6% in May, according to latest data of the National Statistical Service. The industry shrank for a second consecutive month. Moreover, separate data showed that the trade deficit continues to weigh on economic growth in the second quarter.
Although the growth accelerated to 0.6%, the improvement is concentrated mainly in April. Before the referendum for Brexit there was caution, as surveys showed that the surprising decision to leave the European Union (EU) has seriously undermine confidence and business activity. BoE responded by cutting interest rates and introduced new incentives.
In June, factory production was down 0.3% after falling 0.6% in May. Large part of the industry sectors declined. With the largest negative contribution was transport equipment, especially vehicles. The utilities increased production by 0.9% and the extraction and processing of gas grow by 1.5%.
The strong start supported the industrial production to grow by 2.1% in the second quarter. But the economy does not get help from trade, the trade deficit rose to 12.5 billion GBP and the deficit was the largest since the end of 2013. The politicians hope that depreciation of the GBP to boost exports, as Brexit threatens business investment and consumer spending.
Britain maintains a surplus in services, which helps to mask fall as exporter of industrial products. In June, the deficit of goods expanded by nearly 1 billion GBP to 12.4 billion GBP after imports rose more than exports. Furthermore, there is an upward revision of the deficit in May as the imports were 1.6 billion GBP more than initial estimates.
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