Fears seemed to be running high over the UK economy as the factory production in June recorded a surprise fall. The trade gap of UK has also widened to a great extent and as these results came out, London stock market started moving further downwards.
This news of poor data of the industrial condition in UK came out at such a time when the global stock markets are really going through a very bad phase. The news accelerated the crisis which was generated due to ongoing debt crisis in the European nations and also downfall in the US market.
The FTSE 100 index in London fell by almost 5.5% as soon as the data reached to the market. During the beginning of the year, it was expected that two important segments will fuel the growth and lead to the path of recovery of the UK economy. Those two areas were net exports and manufacturing. Half of the current year is gone and both are not able to deliver the satisfactory results needed to booster that growth.
Production in manufacturing fell by 0.4% than May in the month of June and the expectations were 0.2% growth on the other side. The biggest area that is affected is the automobiles as the production of cars got affected to a great extent.
Economists are worried over the fact that the downward equity markets will create a negative business confidence and this will lead to companies cutting down their orders to a great extent. This will further lead the businesses to fall and hence the economy is tend to suffer more.
The total fall of industrial output was 1.6% between the months of April to June in 2011. This was the biggest quarterly fall since the month of May 2009. Manufacturing sector consists of 13% of the UK economy and rest belongs to agriculture and service sector. This data will not give any boost to the GDP of the nation.