UK economy braces itself for Brexit crunch time

Wed 14 Nov 2018
Posted by: William Barns-Graham
Trade News

uk economy

Inflation steady and growth on two-year high as Brexit crunch time nears

The coming days and weeks are full of possibility for the future of the UK in regard to its leadership and its future economic and trading structures, but the UK economy has had a relatively steady period of late.

The Office for National Statistics today reported that inflation was a steady 2.4% during October, slightly lower than predictions of 2.5% from city economists. They reported that a rise in the cost of petrol and utility bills was offset by falling food prices, which were themselves caused by price wars between major food retailers.

A steadying month has reflected the fluctuations of the pound, according to The Guardian. However, a further dip in the pound would see import prices rise which would have an impact on consumer prices.

Undoubtedly, the outcome of the coming days’ political debate around Brexit will have an impact either way on the pound and therefore, ultimately, consumer and import costs.

Economic growth hits a two-year high

The ONS also recently announced a two-year high in overall economic growth. GDP growth in the three months leading to September was 0.6%. In the same period, the trade deficit contracted, with exports growing 2.7% compared to stagnant import growth.

However, Brexit uncertainty is starting to show underlying weaknesses emerge, with a contraction in corporate spending of 1.2%.

Should Brexit uncertainty amplify in the next few weeks, this is likely to contract further and this along with a falling pound and increasing consumer prices could see this acceleration in growth quickly reverse.

Alternatively, if the Brexit deal negotiated by Theresa May pass through the House of Commons, restored business confidence and certainty could see growth accelerate further.