Core tip: Eight months have passed since the Brexit referendum in June last year. The British GDP data released on February 22 showed that the British economy is still strong, breaking the disastrous predictions of many authoritative experts before the referendum. prophecy. But as a direct result of the severe fall in sterling, inflation is rising as expected, raising concerns about how long consumer spending can support the British economy.
Extended reading:
- The UK has revised down the annual GDP rate in the fourth quarter of 2016 to 2%, and business investment has declined
It has now been eight months since the Brexit referendum in June last year, February 22 British GDP data released on the same day showed that the British economy is still strong, breaking the disastrous predictions of many authoritative experts before the referendum. But as a direct result of the severe fall in sterling, inflation is rising as expected, raising concerns about how long consumer spending can support the British economy.
The Guardian’s monthly tracking of economic indicators since the Brexit referendum shows that business activities in many areas have begun to lose momentum, and retail sales have fallen for the third consecutive month. Although the unemployment rate remains low, wages have Growth remains weak.
Of the eight economic indicators, including the trend of the pound and the performance of the stock market, three performed worse than expected this month and two performed better than expected. The unemployment rate was in line with expectations, public finances were better than expected due to changes in the ONS calculation method, and inflation continued to increase but was lower than economists expected.
U.K. inflation rose to 1.8%, the highest since mid-2014, and is expected to continue rising this year due to rising crude oil prices and import costs. In addition to fuel, which rose 17% year-on-year, consumers are also facing more price increases. Fish, cooking oils, fruits and sugary foods are all more expensive than at the same time in 2016. However, the price increase of meat, daily necessities and vegetables is not yet obvious.
Data show that manufacturing fuel and material costs are rising at the fastest rate in more than eight years, with an annual increase of more than 20%, and companies are passing these costs on to consumers.
To make matters worse, the budget of British households – salary growth was lower than expected in the fourth quarter of 2016, with average weekly earnings increasing by 2.6% year-on-year. Although the growth rate is faster than inflation, the gap between the two is growing. Zoom out.
David Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, once told the Guardian, “Workers will inevitably be harmed and will have to cut spending. Rising prices, slower wage and retail sales growth will make 2017 The year has not started well.”
As the main driving force that helped the UK’s economic performance lead the G7 countries last year, the pressure on British household consumption will surely shock the UK’s overall economy.
Although UK GDP increased by 0.7% in the fourth quarter of 2016, in addition to the service industry, the manufacturing and construction industries also performed well. But more recent data shows that rising costs have slowed growth in manufacturing, construction and services in January.
However, perhaps due to “excessive force” before the Brexit referendum, economists’ forecasts are currently relatively cautious, and most believe that the British economy will slow down moderately in 2017. For example, this month the Bank of England raised its forecast for British economic growth this year from the previous 1.4% to 2%, which surprised the market.
Judging from other economic indicators, the pound fell again this month. Meanwhile, UK trade data was better than expected, boosted by exports to non-EU countries, but the Office for Statistics said there was insufficient evidence that exports were boosted by the fall in the value of the pound. Growth in UK house prices has also exceeded economists’ expectations.
In addition, due to strong tax revenue, British public finances performed well before British Finance Minister Philip Hammond delivered his first “spring budget” since taking office in March.
Since entering 2017, the situation of Britain’s exit from the European Union has become clearer – British Prime Minister May announced a specific withdrawal plan. Although the comprehensive exit plan, including exiting the single market and customs union, has caused concerns, But May’s ambition to “build a truly global Britain” has also given people and businesses confidence. If the British government can officially launch the Brexit process in March as planned, then this “drama” will officially begin, and we will gradually get a real glimpse of what Brexit will bring to the UK.
