Brexit

termath of the June 2016 vote to leave the European Union, firms are getting edgier as Brexit day draws nearer — the government had expected to be ratifying a withdrawal agreement with the EU by now.

There is no sign that the uncertainty, described as the “fog of Brexit” by the Bank of England, is going to lift anytime soon, so the economy is not expected to have improved at the start of this year.

Prime Minister Theresa May is struggling to salvage the Brexit deal she agreed on with the EU late last year after it was overwhelmingly rejected by British lawmakers. She’s trying to eke out concessions from the EU, particularly on a controversial provision intended to make sure no hard border returns between EU member Ireland and Northern Ireland, which is part of the United Kingdom.

It’s unclear she will be able to get any concessions and fears have grown in recent weeks that Britain could crash out of the EU without a deal. That’s a worst-case scenario that the Bank of England has said could see the British economy shrink by 8 percent within months and house prices collapse by around a third as trade barriers like tariffs are put up on EU-U.K trade.

In 2018, net trade was a drag on the British economy as it imported more than it exported, a possible reflection of the waning effects of the prior year’s fall in the pound and a slowing global economy.

Analysts were careful not to conclude that the British economy would start contracting in the first quarter of 2019, not least because British consumer spending tends to be resilient.

“Today’s data bring clear signs that Brexit uncertainty is depressing the economy, but we would not rush to conclude yet that GDP is on track to fall outright in the first quarter,” said Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics.

“Solid growth in households’ spending, thanks to low inflation and robust labor income growth, should keep GDP on a slightly rising path.”