The Brexit squeeze on British consumers has hurt the UK government’s finances as well as retailers, new figures show, indicating that the economic slowdown at the start of the year is now being felt more broadly.
A stalling of sales tax revenues, a barometer of the economy, helped to widen the UK’s budget deficit by more than expected, official data showed. A separate survey showed business confidence among retailers declined at the fastest pace since 2012, around the last time the UK flirted with recession. The UK economy was barely ruffled last year by June’s shock vote to leave the EU. However, a steady rise in inflation since the referendum, combined with weak wage growth, has slowed its momentum this year.
Official figures due tomorrow are expected to confirm that the pace of growth more than halved in the first three months of 2017, a contrast with strong growth in the eurozone so far this year.
“Today’s numbers show the public finances have started to feel the effects of the economic slowdown, which will likely continue to feed through to softer revenue growth,” said HSBC economist Elizabeth Martins.
The headline budget deficit measure rose 13% to £10.4bn (€12bn) in April, the first month of the fiscal year, the UK’s Office for National Statistics said. The figure was higher than all forecasts from economists.
As well as slow growth in tax revenues payments of income tax rose by little more than 1% — the uncertainty about how sharply the UK’s economy will slow is also taking a toll on retailers’ investment and hiring plans, said the Confederation of British Industry.
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