ZCZC
BFF-20
BRITAIN-EU-BREXIT-POLITICS-ECONOMY-FACTS
UK economy ahead of Brexit
LONDON, March 11, 2019 (BSS/AFP) – 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:
– Growth –
Gross domestic product (GDP) growth slowed to 1.4 percent last year after
expanding by 1.8 percent in 2017.
The OECD, which groups the world’s top developed economies, last week
forecast that Britain’s economy would grow only 0.8 percent this year as it
slashed a previous estimate of 1.4 percent.
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.
– Investment –
Faced with Brexit uncertainty, companies’ UK investments dropped 1.4
percent 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.
– Employment/wages –
British unemployment stands at 4.0 percent, the lowest rate since 1975.
Average earnings including bonuses grew by 3.4 percent in the three months
to December from a year earlier, boosting the purchasing power of workers’
salaries.
– Inflation/interest rates –
Britain’s annual inflation rate, which surpassed 3.0 percent 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 percent.
The drop has allowed the Bank of England to keep its main interest rate at
very low rate of 0.75 percent, helping borrowers but hurting savers.
– Consumption –
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.
– Pound/stocks –
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 percent against the dollar since June 2016 — and more than
10 percent versus the euro.
A weaker pound nonetheless boosts exporters, whose goods and services
become cheaper for those buying in stronger currencies.
BSS/AFP/MR/ 1040 hrs