UK Economic Growth Slowest Since 2012 on Brexit Concerns

brexit; UK EU

The British economy is railing with the effects of Brexit looming over its head like an axe. After growing 1.8% in 2017, the GDP growth of the British economy was just 1.4% for the year ended 31st March 2018, which was the lowest in six years since 2012.

For a successful Brexit arrangement, the UK needs to ink a deal with the European Union (EU) as well as get the same deal passed through its own parliament. While British Prime Minister Theresa May has managed to strike a deal with the EU, she is unable to convince her fellow parliamentarians and hence fears have grown that Britain could crash out of the EU without a deal before the March 29th deadline. She must now go back to the EU and seek further concessions and hope that the UK Parliament (where she is not viewed as a strong leader) accepts it. This uncertainty has made businesses very nervous and clear signs of a struggling economy can be seen. As a direct result of this, many high net worth individuals (HNI’s) are seen moving their businesses out of the UK and countries like France are seen benefiting from the fallout.

After clocking its worst performance in six years, further bad news was on the horizon for UK and data for the three months ended December 2018 showed GDP growth at just 0.2%. Construction, production and services output fell for the month of December and this was the first time since September 2012 that there has been such a broad-based fall in monthly output. The Pound fell against the Euro and American Dollar in reaction to Monday’s growth data. Further, jobs running into the hundreds of thousands (especially automobile manufacturing jobs) are at a risk if a no deal Brexit situation emerges; not to mention the stock market turmoil that may follow.

The UK is currently the 5th largest economy in the world. However, India is all set to overtake UK and claim the 5th spot for itself some time in 2019. Common sense would dictate that Brexit played a big part in this.

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