Postponed, not avoided: The Brexit slowdown is under way

Posted: May 31, 2017 in economy
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UK politicsRead more British election coverageTHERE is plenty of evidence that incumbent governments do better in elections when the economy is strong. In the last year or so, the British economy has not looked too bad. In 2016 average earnings rose by 2.2%, the joint-highest growth seen since the economic downturn in 2008. Unemployment is around 4.5% and the employment rate is at its highest since records began. Theresa May will reap the rewards of decent growth at the election—just as things start to turn sour. Economists, of course, had believed at the time of the Brexit referendum last June that a vote to Leave would push the economy into recession almost immediately. In the event, they were proved spectacularly wrong. Consumer confidence was barely affected: those who voted Leave had little reason to feel concerned about the future (after all, they had got what they wanted), whereas for Remain voters, Brexit seems vague and a long way off. GDP grew by 0.5% in the third quarter of 2016 and 0.7% in the fourth, leaving Britain with the fastest growth of any G7 economy for 2016 as a whole. Yet something related to the Brexit referendum—the tumble in the value of sterling—is now causing the economy to slow. The British economy is highly dependent on consumer spending. With …

via Economic Crisis


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