Since the vote to leave the EU in June 2016, it’s fair to say that the UK economy has been changeable. We’ve decided to take a look back at recent updates.
When rates were raised from 0.25% to 0.5% on the 2nd of November, the pound fell almost 2% against the dollar. However, by the end of November, nearly all of the lost ground has been recovered.
Since the EU referendum last June however, the pound remains at more than 10% down against the dollar.
The Autumn Budget was announced by Chancellor of the Exchequer, Philip Hammond, on the 22nd of November. Included in his speech was the following:
· The 2017 growth forecast was dropped from 2% to 1.5%,
· The forecasts for 2018, 2019, 2020 and 2021 were revised down to 1.4%, 1.3%, 1.5% and 1.6% respectively,
· Over the next two years, £3 billion is to be set aside in order for the UK to prepare for every possible outcome of the UK leaving the EU.
On the 21st of November, it was revealed that Britain’s deficit unexpectedly widened in October. Public sector net borrowing (excluding the nationalised banks) grew by £500 million to £8 billion in October, compared with the same month a year ago. City economists expected the deficit (the gap between government spending and tax receipts) to improve by £500 million to £7 billion.
The wider deficit was driven by the government paying more on debt linked to the rate of inflation, which has soared in recent months due to the fall in sterling due to Brexit.
In October, it appeared that the country’s recent job boom was coming to an end. Figures from the Office for National Statistics showed that the number of those in work decreased by 14,000 from July to September.
However, average weekly earnings (excluding bonuses) were 2.2% higher during the same period.
In the Autumn Budget, Hammond forecasted that 600,000 more people will be in work by 2022.
Despite a drop in September of 0.7% in high street sales, October saw a bounce back with a 0.3% gain. However, overall in 2017, the first year-on-year drop in consumer spending since 2013 was reported. This highlights the burden of the rising cost of living that households are facing.
The key Christmas shopping period will be examined by Economists to gauge the resilience of consumer spending, which is a key driver for the economy’s health.
So, there we have it, some of the recent changes that are affecting businesses and consumers alike. It’s an interesting time and we’ll be watching closely for any key updates that you need to know about. Watch this space for more key updates!]
Keep up to date with the latest UK economy developments by visiting www.squareone.us.com, or follow us on LinkedIn and Twitter.