Brexit turmoil drives UK economy toward recession

Britain’s economy unexpectedly shrank in the second quarter as the country weighs up the prospect of a no-deal exit from the EU. (AFP)
Updated 10 August 2019

Brexit turmoil drives UK economy toward recession

  • Weak manufacturing and construction sectors trigger first contraction since 2012

LONDON: Britain’s economy unexpectedly shrank in the second quarter of the year on Brexit turmoil, official data showed on Friday, placing the country on the verge of a recession.

Gross domestic product (GDP) fell 0.2 percent in the April-June period, the first time the economy has contracted in almost seven years, the Office for National Statistics (ONS) said.

The data, which was worse than market expectations for zero growth, sent the pound sliding against the euro and dollar.

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

Economic activity was buoyed in the first three months because Britain had initially been scheduled to leave the EU at the end of March.

“GDP contracted in the second quarter for the first time since 2012 after robust growth in the first quarter,” said Rob Kent Smith, head of GDP at the ONS.

“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,” he added.

Another contraction in the current third quarter would put Britain in official recession, ahead of the nation’s expected EU withdrawal at the end of October.

British Prime Minister Boris Johnson replaced Theresa May in July after winning the governing Conservatives’ leadership contest on a pledge to take Britain out of the bloc with or without a divorce deal on Oct. 31.

“The latest look at the UK economy makes for pretty grim viewing,” said XTB analyst David Cheetham.

“Given the growing threat of a no-deal Brexit that looms menacingly overhead, it would not be at all surprising if the current quarter also shows a contraction — therefore meeting the standard definition of a recession.”

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


Indonesia’s anti-trust watchdog levies $3 million in fines on Grab and partner

Updated 03 July 2020

Indonesia’s anti-trust watchdog levies $3 million in fines on Grab and partner

  • Grab infringed the anti-monopoly laws after evaluating the case
  • Grab is Southeast Asia’s most valuable startup with a valuation of $14 billion

JAKARTA: Indonesia’s anti-trust watchdog announced fines totaling more than $3 million for Grab and its business partner after finding it guilty of breaking anti-monopoly laws, a verdict the ride-hailing firm vowed to appeal.
The Business Competition Supervisory Commission (KPPU) said it had found Grab had discriminated against its drivers, prioritizing those provided by partner PT Teknologi Pengangkutan Indonesia (TPI) to the Softbank-backed firm.
In a statement, Dinni Melanie, the chair of the watchdog judicial panel, said it had found Grab infringed the anti-monopoly laws after evaluating the case on Thursday evening.
The agency imposed a fine of $2.1 million on Grab and a penalty of $1.03 million rupiah on TPI.
A spokesman for Grab, which is Southeast Asia’s most valuable startup with a valuation of $14 billion, said the firm would appeal the verdict.
“Grab’s view is that it has not violated any regulation, engaged in any anti-competitive business practices, or injured any third parties,” he said, characterizing the watchdog’s findings as “unsubstantiated allegations.”
Reuters could not immediately reach TPI to seek comment.