The British economy’s post-Brexit vote bounce

The British economy’s post-Brexit vote bounce is losing momentum as the weak pound and higher inflation herald a squeeze in living standards, according to a Guardian analysis.

Although official growth figures to be published on Thursday are likely to show the economy will avoid recession in the second half of the year, the latest Guardian analysis of the post-referendum economy shows a more mixed picture.

The most notable shift over the last month was a further sharp fall in the value of the pound. Against the dollar, the pound is lingering around the $1.22 mark – about 18% lower than on 23 June, the day of the referendum.

At one point a “flash crash” in the currency markets pushed the pound briefly to about $1.15. It quickly recovered, but the underlying pressure on the currency has remained following Theresa May’s declaration that she will trigger article 50 before the end of March 2017.

The Guardian has chosen eight economic indicators, as well as the value of the pound and the performance of the FTSE, to track the economy on a monthly basis.

The dashboard for October shows that four of the eight categories have performed worse than expected, two were as expected, and two were better. Inflation jumped more sharply than expected to 1%, the highest level in almost two years, Britain’s trade deficit with the rest of the world widened, as growth in imports rose faster than exports, and retail sales were flat as shoppers were put off by higher clothing prices and exceptionally warm September.

Four months on from the Brexit vote, there are warning signs that consumers should prepare for a renewed squeeze in living standards, as the weak pound drives inflation higher and cautious businesses rein in wage growth.

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