Brexit slows UK economy to a crawl

Brexit slows UK economy to a crawl

Britain’s economic growth slowed to a crawl at the end of 2018, according to new data, less than three months before Brexit.

A closely watched business survey indicated firms were growing more anxious, while figures from the Bank of England painted a picture of households reining in spending.

Britain is due to leave the EU on March 29 but what will actually happen on that day remains far from clear.

The future of UK Prime Minister Theresa May’s deal struck with the EU hangs in the balance as a parliamentary vote looms.

That raises the possibility of Britain leaving the EU without a deal to smooth the economic shock. Calls for a second referendum — which Ms May has rejected — are growing.

Yesterday’s figures indicated that the disarray is starting to affect the UK economy.

Lending to consumers grew at its slowest pace in nearly four years in November and the number of mortgage approvals fell by far more than expected, the Bank of England said.

Lender Nationwide said its house price index had grown in December at the weakest annual pace in nearly six years.

Overall, Britain’s economy looks on track for quarterly growth of just 0.1% in the fourth quarter, data company IHS Markit estimated, based on its monthly purchasing managers’ index (PMI) surveys of businesses.

November and December were the weakest two months for morale among services firms, which make up the bulk of the British economy, since March 2009, the PMI indicated.

“The latest UK services PMI provides further evidence that the economy has lost most, if not all, of the momentum it had last summer,” ING economist James Smith said.

The headline IHS Markit-CIPS UK services PMI rose slightly more than forecast by economists polled by Reuters.

But the increase was one of the slowest since the Brexit referendum.

“(Clarity) on Brexit is needed urgently in order to prevent the economy sliding into contraction,” said IHS Markit’s chief economist, Chris Williamson.

The Bank of England figures showed the annual growth rate in unsecured consumer lending had slowed to 7.1% in November from 7.4% in October, the smallest increase since March 2015.

The data chimed with signals from many British retailers that consumers had reined in their spending in late 2018.

The number of mortgages approved for house purchase fell to 63,728 in November, the Bank of England said — the lowest figure since April.

Reuters

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