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.
Widening trade gap
They stretch from retrenching households to hesitant businesses, from a widening trade deficit to lacklustre manufacturing. They also come just as the EU and Britain return to the negotiating table, the latter with a handful of new post-Brexit position papers.
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.
The performance of Britain’s pound over that period suggests few people were impressed enough with them — or with the likelihood they will come to pass — to overcome the economic signs.
Running through the release of five official Brexit papers, the pound has lost more than 1.4% against the dollar since August 14 and the euro has gained the same against sterling.
While the pound weakness is not directly linked to the papers, their release has clearly done nothing to improve confidence in the currency. That is at least in part because the U.K. economy is starting to feel the impact of Brexit.
“Economic momentum looks uncertain. Monthly factory orders this year suggest that the sector is failing to capitalise from a weaker sterling and a pick-up in global trade,” Jaisal Pastakia, investment manager at Heartwood Investment Management, wrote in a note.
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.