-U.K. economy slows down on path of Brexit
Despite Chancellor Philip Hammond’s claims of a positive outlook and expectations of stronger growth to bring the era of austerity to an end in the autumn budget, the latest data released by the Office of National Statistics (ONS) indicates the economy is weakening.
Growth slowed to 0.4 percent from 0.6 percent in the third quarter. In October alone, growth was just 0.1 percent.
“GDP growth slowed going into the autumn after a strong summer, with a softening in services sector growth mainly due to a fall in car sales. This was offset by a strong showing from IT and accountancy, ”Head of National Accounts at ONS Rob Kent-Smith said with regards to the GDP figures for the three months to October.
“Manufacturing saw no growth at all in the latest three months, mainly due to a decline in the often-erratic pharmaceutical industry. Construction, while slowing slightly, continued its recent solid performance with growth in house building and infrastructure.” Kent-Smith added.
The U.K. is facing a historical turning point on Tuesday, which could take the whole Brexit process started in June 2016 to a whole new unknown level. Despite the efforts of the U.K. Prime Minister Theresa May to come up with a suitable deal, she appears to have failed to get the hard Brexiteers in her party on board. Should there be a vote of no confidence on May’s deal, the ensuing results are set to negatively impact the markets.
If the Parliament votes against her deal, May could decide to renegotiate with Brussels and take some time to get the opposition in her own party on side. There is also the possibility that she could eventually be forced to step down and resign. In this case, the country could be faced with another general election, which in turn could favor a Labour party victory given that in the last election the party lost by a narrow margin. A Labour victory could well complicate the whole process even more as the Labour Party’s leader Jeremy Corbyn’s view on Brexit has been reported in the past with mixed message on his approach. However, he did say he would rather focus on a general election rather than upsetting remainers or Brexiteers.
