UK Economy Still Performing Well
Recent data releases have highlighted the continued robustness of the UK economy in the aftermath of the Brexit referendum decision last summer with Inflation having risen steadily over the last twelve years.
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Indeed, recent Manufacturing, Services & PMI data sets have continued to outperform, posting stronger than expected results. Markit has noted that the decline in Sterling continues to “be seen as a key driver for growth.†The current depressed levels of Unemployment alongside historically low-interest rates are also likely to be contributing to the boost in UK activity.
Speaking on January 5th, BOE Chief Economist Haldane noted that “near-term data has surprised to the upside.†However, the BOE member also noted that these releases had not caused the BOE to “fundamentally change its view on the fortunes of the economy looking forward.â€
The Financial Times recently published an annual survey of economists which revealed that 40% of economists were more pessimistic regarding the impact of Brexit than compared to when they were asked a year ago; In comparison, only 13% were now more optimistic.
UK Trading Conditions Have Improved
For a lot of business, UK trading conditions have improved over the last half a year due to the combination of very accommodative monetary policy and an improvement in global growth. Furthermore, in contrast to consensus opinion, there are as yet no signs that consumers are refraining from spending despite political uncertainty. Indeed, UK consumers have actually continued to borrow to extend their spending.
Data released by the BOE showed that UK net consumer credit stood at £1.9bln in November, the most since March 2005. Despite these positive indications, one of the main factors that has fueled the UK economy’s resilience over the last six months is the fact that the UK’s trading relations have yet to change as Brexit is yet to officially commence.
