Business

Britain heads back to Brexit table with declining economy

Consumer spending slumps to two-and-a-half-year low of just 0.1% quarter-on-quarter

Reuters August 26, 2017

PHOTO: AFP

LONDON: Britain’s economy is beginning to feel the Brexit pinch, or perhaps given the strong performance of the rest of the world economy, it should be punch.

After a prolonged period of relatively benign economic numbers following last year’s vote to leave the European Union, there are now signs of a potentially serious slowdown.

Since mid-August, London has been releasing official papers on issues such as trade, customs, the European Court of Justice, and what the province of Northern Ireland’s future border with EU member Ireland will look like.

Running through the release of five official Brexit papers, the pound has lost more than 1.4% against the dollar since Aug 14 and the euro has gained the same against sterling.

That is at least in part because the UK economy is starting to feel the impact of Brexit.

Elsewhere, second-quarter economic growth figures showed consumer spending slumping to a two and a half year low of just 0.1% quarter-on-quarter.

Business investment was also at a standstill. Barclays said this was “highlighting just how much businesses are holding back investment in the face of high levels of uncertainty regarding the outlook for business conditions.”

Add to that a warning from Britain’s heavyweight food supply industry that EU workers it relies on are already leaving or considering doing so.

It is not completely linear, of course. Car manufacturing bounced back in July and the unemployment rate is falling.

Last month’s purchasing managers indexes also pointed to steady -- albeit sluggish -- economic growth over the coming months.

So the wheels have not come off.

But the backdrop for Britain as it returns to the table on Monday is nonetheless a stark contrast to what the other side is experiencing.

Published in The Express Tribune, August 26^th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.