British Breakdown: Economy, Politics and Brexit Overview | Part Two | News

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Economy Update

The Guardian reported that the UK economy has been given a new lease of life after a disappointing start to the year, and it’s all been thanks to the expanding services sector (accounting for just under 80% of GDP). This, according to survey checks by the Chartered Institute of Procurement and Supply and the IHS Markit, is the strongest growth in the last eight months, with the economy expected to grow by 0.4% in the second quarter.

We can thank the heatwave for a sunnier economic outlook, as consumer spending rose in bars and restaurants; the service sector growth is expected to remain steady over the next two years, with a continued subdued consumer spending growth (a projected 1.1% according to PWC). The CIPS/IHS Markit check also indicated an unwavering demand for business and financial services, whilst the manufacturing sector is performing better than expected- retaining its momentum since the end of 2017. Grey clouds gather above the construction sector, which has fallen due to decreased interest in commercial property investment, something which is set to continue for the rest of the year.

CIPS/IHS Markit purchasing managers’ index went from May’s reading of 54.0 to 55.1 in June, indicating expansion. UK economist Ruth Gregory raises the question of whether the survey underestimates the true scale of the ‘bounce back’ (helped by the falling inflation rates, great British weather and the royal wedding), especially when you consider the state of the retail sector and the high-profile business failures making recent headlines.

For now, the economic outlook looks stable considering. Business investments, however, are set to drag due to uncertainties stemming from Brexit negotiations. Yet, stronger Eurozone economies will find British exports attractive due to the competitive value of the pound against the euro which will ultimately support UK GDP growth.

With all the twists and turns of Brexit negotiations, the economy and the political games, the business world is seeing major changes that they were not prepared for. Instead of worrying, complaining about or ignoring the associated problems, businesses need to plan the best way to navigate Brexit with the help of impartial industry experts. Working with individual clients, we develop cost reduction strategies that help you toward the future vision of your business. Get in touch with Expense Reduction Analysts today to see how we can help you be Brexit-ready.

Article by: Nick Clement

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