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UK economy not so Brexit-proof after all?

Wednesday, February 22, 2017 - 01:48

Britain's economy accelerated at the end of 2016 but growth for the whole year was weaker than previously thought and there are signs of weakness ahead, data showed, suggesting the Brexit vote will start to take its toll in 2017. David Pollard reports.

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It all seems long ago. A time when opinion polls said Brexit couldn't happen. But it is - or appears to be about to - and the much-feared damage it could do the UK economy could also be about to happen. UK GDP for 2016 coming in weaker than expected. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "If you look at the business investment side, down one per cent and the second consecutive quarter of contraction. There is a concern and there is a warning sign that businesses aren't as confident in the outlook for the UK economy, or as comfortable to invest in an uncertain outlook." In the fourth quarter on its own, growth did accelerate at its fastest for the year. But there are other warning signs. Household spending slowing from point 9 to point 7 per cent. Services in December at their weakest in seven months. Those new numbers coming as others point to other concerns - sterling's post-referendum slide pushing prices higher. (SOUNDBITE) (English) FIDELITY INTERNATIONAL, INVESTMENT DIRECTOR, TOM STEVENSON, SAYING: "Last week, we had some retail sales figures which suggest a deterioration in consumer confidence, and that's really a reflection of the rising inflation rate." Sterling weakened further on the new data. In any case, analysts are already factoring in more price hikes. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING "Input prices, which are signs of future inflation, have risen above 20 percent which is obviously extremely considerable, and the more this gets passed on to the end consumer, which again we are seeing signs of, then the end consumer is likely to be severely tested." March 31 is the deadline the UK government's set for triggering a formal Brexit divorce. With only weeks to go, just like its voters, Britain's economy perhaps not so Brexit-proof after all.

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UK economy not so Brexit-proof after all?

Wednesday, February 22, 2017 - 01:48