LONDON — The British economy shrank in the second quarter, its first contraction in more than six years, as uncertainty over Brexit and slowing global growth took a toll.
The economy fell 0.2 percent in the three-month period ending in June, the Office of National Statistics said on Friday. The drop ends a string of 25 consecutive quarters of economic growth in Britain. Analysts had predicted growth to be unchanged compared with the first quarter.
The British pound, which has been slumping for months, lurched further after the report was released, falling a fraction below $1.21.
The economic slowdown occurred across Britain’s manufacturing, construction and agriculture sectors. Only the services sector showed a small uptick, according to the statistics agency.
The latest data reflect how British businesses have been whipsawed by the deliberations over Britain’s withdrawal from the European Union. Early this year, businesses built up inventories in anticipation of supply-chain disruptions surrounding the expected March 29 departure date. That feverish activity bolstered the economy, and the gross domestic product grew by 0.5 percent in the first quarter.
But the Brexit deadline was pushed to October, and businesses made fewer purchases in the second quarter as inventories were slowly used up. Economic growth faltered.
A global slowdown, too, is weighing on the economy. The International Monetary Fund has reported subdued growth around the globe as the two largest economies, the United States and China, engage in a trade war. Germany said this week that industrial production fell 1.5 percent in June, far more than expected, raising fears of a recession in Europe’s largest economy. Japan, though, is reporting a different story: its economic output grew at an annual rate of 1.8 percent in the second quarter, the government said on Friday.
Industrial leaders have pointed to the possibility of widespread economic disruption if Britain leaves the European Union without an agreement on a future relationship — a “no-deal Brexit.” The calls have gotten louder as Oct. 31, the new Brexit deadline, approaches.
Last week, the Bank of England said the chance of a no-deal Brexit was hampering its ability to forecast where the British economy will be in the coming months. The bank said it was edging toward a more negative outlook because of the potential Brexit disruption and because of slower global economic growth.
The British pound has been sliding in value versus the American dollar for several months, hitting lows last seen in early 2017. A weaker pound makes British exports cheaper, while making imported items more expensive. Because the country imports more than it exports, the net effect could be a negative.
The 0.2 percent contraction, the statistics agency’s initial estimate for the second quarter, was the first downturn since the fourth quarter of 2012, when the economy fell 0.2 percent.