United Kingdom: Is growth shifting down a gear in the long-term?

CHART OF THE WEEK

Every month the National Institute of Economic and Social Research (NIESR), an independent UK think tank founded in 1938, publishes quarterly growth forecasts for the nation. These forecasts are generally considered as being reliable. The NIESR’s June release for second-quarter GDP growth is 0.3%, or approximately 1.2% on an annualised basis and slightly ahead of the first quarter. However, compared with the 2.1% rate seen over the previous five years, the latest data signals a sharp slowdown.

OUR ANALYSIS

Slower consumption can be explained by the rise in inflation, which itself is linked to a weaker currency. With wages flat-lining, real disposable household income has come under pressure and retail sales have stalled since the start of the year. A more stable pound should ease the pressure on spending, but Brexit-related uncertainties and the likelihood of restricted access to the Single European Market could weigh on investment.

 

The opinion expressed above is dated 10 July 2017, and liable to change.

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Julien-Pierre Nouen

Directeur des études économiques et de la gestion diversifiée