Brexit: UK experiences mix fortunes
0.8% Growth this year predicted by OECD 1.8%
Britain’s annual inflation rate 4% Unemployment rate recorded in UK 12%
Decline in the value of pound against dollar since June 2016
london — With just weeks to go until Britain is due to exit the European Union, the country’s economy is experiencing mixed fortunes, with slowing growth and low unemployment.
Pre-Brexit Britain is also buffeted by bitter global headwinds — from slowing Chinese and eurozone economies as well as trade war tensions.
Ahead of this week’s crucial vote by parliament on support for the Brexit deal, here is a summary of Britain’s key economic indicators:
Gross domestic product (GDP) growth slowed to 1.4 per cent last year after expanding by 1.8 per cent in 2017.
The OECD, which groups the world’s top developed economies, last week forecast that Britain’s economy would grow only 0.8 per cent this year as it slashed a previous estimate of 1.4 per cent.
Worryingly, the revision assumed a smooth Brexit process, despite fears that Britain could still crash out of the European Union without a deal.
The Bank of England has also drastically cut its UK growth forecast for this year, even in the event of an orderly Brexit.
The government is expected to revise its official growth forecasts when it gives a budget update on Wednesday.
Faced with Brexit uncertainty, companies’ UK investments dropped 1.4 per cent in the final three months of last year compared with the third quarter, according to the Office for National Statistics (ONS).
It was the fourth quarterly decline in a row, the worst run for Britain since the global financial crisis a decade earlier.
Japanese carmakers Honda and
Nissan both recently curbed investment, while doubts remain over Airbus activities in Britain, especially after the European aerospace giant
axed its A380 superjumbo jet.
British unemployment stands at 4 per cent, the lowest rate since 1975. Average earnings including bonuses grew by 3.4 per cent in the three months to December from a year earlier, boosting the purchasing power of workers’ salaries.
Britain’s annual inflation rate, which surpassed 3 per cent following the Brexit referendum in June 2016 as a plunging pound hiked import costs, has steadily declined to stand at a two-year low of 1.8 per cent.
The drop has allowed the Bank of England to keep its main interest rate at very low rate of 0.75 per cent, helping borrowers but hurting savers. Consumer confidence has hit a five-year low, according to the GfK Institute. The ONS has meanwhile pointed to sluggish growth in household spending over the past two years.
The pound, seen as a better indicator of the UK’s economic health than the London stock market which is loaded with multinationals, has shed approximately 12 per cent against the dollar since June 2016 — and more than 10 per cent versus the euro. A weaker pound nonetheless boosts exporters, whose goods and services become cheaper for those buying in stronger currencies. —