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Brexit latest: How is the UK economy doing? Brexit latest: How is the UK economy doing?
(5 days later)
The UK may have decided to leave the European Union on 23 June, but what this will actually mean for the country's economy, housing and jobs markets will only become clear in the ensuing months. The UK may have voted to leave the European Union on 23 June but it is not yet clear what this vote, and the country's subsequent path to Brexit itself, will actually mean for the economy.
Here we highlight the latest developments following the vote.Here we highlight the latest developments following the vote.
EconomyEconomy
Warmer weather and a weaker pound have helped boost retail sales in July - which were 5.9% higher compared with a year ago - with sales of watches and jewellery doing particularly well. Many economists prior to the referendum had been predicting an immediate and significant impact on the UK economy and consumer confidence should the country vote to leave the EU. But it's a prediction that has not been borne out by the figures so far.
While these figures only take in one month, they go against predictions that the vote to leave the EU would lead to an immediate drop in consumer confidence. Retail sales in July were up 5.9% on the same month last year helped by warmer weather and a weaker pound. It was a boost in High Street sales that was also highlighted by the British Retail Consortium (BRC) and KPMG survey.
Figures released earlier this week also showed little immediate impact of the Brexit vote, but the fall in value of sterling has led some economists to warn of signs of inflationary pressures building in the UK. Inflation rose in July, with the Consumer Prices Index (CPI) rising to 0.6% in the month, largely due to higher fuel prices as they're priced in dollars. The Office for National Statistics (ONS) said there was "no obvious impact" on these inflation figures from the vote.
Inflation rose in July - with the Consumer Prices Index (CPI) rising to 0.6% in the month. This was largely due to rising fuel prices, which are priced in dollars. UK industrial output grew at the fastest rate for 17 years in the April-to-June quarter, up 2.1% compared with the first quarter of the year. The ONS said "very few" respondents had been affected by the uncertainty from the referendum.
The Office for National Statistics (ONS) said there was "no obvious impact" on these inflation figures from the vote, though elsewhere separate figures from the ONS suggested the pound's fall has increased manufacturers' import costs. Meanwhile, the Institute for Fiscal Studies (IFS) said that keeping Britain's EU membership could boost the country's economy by an extra 4%, compared with just being a member of the World Trade Organization.
Meanwhile, the pension funds deficit for Britain's top 100 companies widened sharply in the past year, according to pensions experts LCP. Interest rates
The deficit has grown because bond yields have fallen since 23 June - exacerbated by the Bank of England's recent decision to cut interest rates to a record low of 0.25%. Falling bond yields cause problems for pension funds because they reduce the amount of income available from their investments. Since the vote the Bank of England has taken a number of steps to boost the UK economy. It has cut interest rates from 0.5% to 0.25% - it's the first reduction in the cost of borrowing since 2009 and takes UK rates to a record low.
But sterling's fall seems to have partly offset this. A weaker pound means overseas investments by pension funds are worth more in sterling terms. The Bank has also announced additional measures to stimulate the UK economy: a huge extension of its quantitative easing programme that could pump an extra £170bn into the economy, and a £100bn scheme to force banks to pass on the low interest rate to households and businesses.
When the Bank announced its measures to stimulate the UK economy at the beginning of August, which included the interest rate cut as well as a new round of quantitative easing, it also said there was scope to cut the interest rate further if the economy worsens. One effect of the interest rate cut is that it has exacerbated the growing pension funds deficit because of falling bond yields. As yields fall it reduces the incomes pension funds get from their investments.
Due to "market expectation of interest rates staying lower for longer", High Street bank Santander announced a 1.5% cut in credit interest paid to millions of customers with its 123 account. Currency
Elsewhere, the Institute for Fiscal Studies (IFS) has said that keeping Britain's membership of the EU single market could boost the country's economy by an extra 4%. Sterling has fallen significantly since the vote, driven by uncertainty about Britain's economic outlook and its future relationship with the rest of the EU. The drop has been accentuated by the cut in interest rates and the Bank of England's economic stimulus measures.
The think tank compared the benefits of staying in the single market compared with just being a member of the World Trade Organization. While leaving the EU would free the UK from having to make a budgetary contribution of £8bn, loss of trade could depress tax receipts by a larger amount, it said. Against the dollar, the pound is now worth about $1.30. A year ago it was worth $1.57 - a fall of 17%. Against the euro, it is now worth about €1.15. A year ago it was worth €1.35 - a fall of 14%
Warmer weather helped Britain's retailers sell more in July than during the same period last year, defying predictions of a post-Brexit slump, with total sales up by 1.9%, according to a survey from the British Retail Consortium (BRC) and KPMG. One beneficiary of cheaper sterling has been the UK's own tourism sector, as a weaker pound makes Britain a cheaper destination for overseas tourists. The travel analytics firm ForwardKeys says flight bookings to the UK rose 7.1% after the vote.
Helen Dickinson, the BRC chief executive, said "little has materially changed" for most UK households since the vote, so the rise was not surprising. Caissa Touristic, a tour operator specialising in Chinese travel to Europe, says it's seen a 20% increase in enquiries and bookings for the UK this summer compared with the same period last year.
UK industrial output grew at the fastest rate for 17 years in the April-to-June quarter, up 2.1% compared with the first quarter of the year. The Office for National Statistics said "very few" respondents had been affected by the uncertainty from the referendum. And it's not just London which is benefitting. Irish no-frills airline Ryanair says it has seen a boost in overseas visitors travelling to Manchester, Liverpool, Leeds and Scotland as well as the capital.
The UK's tourism sector has also seen a boost, said travel analytics firm ForwardKeys. Flight bookings to the UK rose 7.1% in the four weeks after the vote, as a weaker pound has made Britain a cheaper destination for overseas tourists. Trade
Figures from the ONS suggest that the fall in the value of the pound since the vote has increased the cost of imports for manufacturers.
Input prices faced by manufacturers rose 4.3% in the year to July, compared with a fall of 0.5% in the year to June.
The most dramatic rises came in the cost of imported food materials, which rose 10.2%, and the price of imported metals, which rose 12.4%.
The fall in value of sterling has led some economists to warn of signs of inflationary pressures building in the UK as it puts up the costs of imports - not just for retailers but also for many manufacturers who source components and raw materials from overseas.
House pricesHouse prices
The UK housing market is continuing to slow after the Brexit vote, according to a survey by the Royal Institution of Chartered Surveyors (Rics) with a significant slowdown in price rises in the three months to the end of July. Though Rics also says the market could take off again over the next 12 months. The UK housing market is continuing to slow, according to a Royal Institution of Chartered Surveyors (Rics) survey, with a significant slowdown in price rises in the three months to the end of July.
Meanwhile, there have been mixed signals about the state of the UK housing market post-Brexit from the Halifax and the Nationwide Building Society. Rics also says the market could take off again over the next 12 months, and there have been mixed signals about the UK housing market from the Halifax and the Nationwide Building Society.
The Halifax said UK house prices fell 1% in July compared with June, while the Nationwide said prices rose by 0.5% during the month. Annual house price inflation is 8.4% according to the Halifax, and 5.2% according to the Nationwide. The Halifax said UK house prices fell 1% during the month of July, while the Nationwide said prices rose by 0.5%. The Halifax says annual house price inflation is 8.4%, the Nationwide says 5.2%.
It's a different story when it comes to commercial property though. Demand for office space in London has bounced back from a pre-referendum dip, according to a report from the commercial property firm CBRE. It's a different story when it comes to commercial property. Demand for London office space has bounced back from a pre-referendum dip, according to the commercial property firm CBRE.
The amount of space being taken by firms in the capital rose to almost a million square feet in July - a 24% rise on the figure for June. The amount of space being taken by firms in the capital rose to almost a million square feet in July - up 24% on June.
Earlier, in its August inflation report, the Bank of England suggested that uncertainty had "probably weighed on activity" in the housing market and that house prices would "decline a little over the near term". Earlier, in its August inflation report, the Bank of England suggested that uncertainty had "probably weighed on activity" and that house prices would "decline a little over the near term".
ConstructionConstruction
UK construction output fell in June but there is "little anecdotal evidence" of a Brexit impact, says the Office for National Statistics. This contrasts with the Markit/CIPS purchasing managers' index (PMI), which suggests output in July shrank at its fastest since June 2009. UK construction output fell in June but there is "little anecdotal evidence" of a Brexit impact, says the says the ONS. This contrasts with the Markit/CIPS purchasing managers' index (PMI), which suggests construction output in July shrank at its fastest since June 2009.
Building suppliers firm Travis Perkins says the vote has created "significant uncertainty" in the outlook for its business.Building suppliers firm Travis Perkins says the vote has created "significant uncertainty" in the outlook for its business.
However, the Mineral Products Association, which represents firms making products such as asphalt and cement, said its figures pointed to an upturn in the industry.However, the Mineral Products Association, which represents firms making products such as asphalt and cement, said its figures pointed to an upturn in the industry.
JobsJobs
Total UK unemployment dropped between April and June in the run-up to the Brexit vote, with the jobless total down by 52,000 to 1.64 million - leaving the unemployment rate at 4.9%. Total UK unemployment dropped between April and June in the run-up to the vote, with the jobless total down by 52,000 to 1.64 million - leaving the unemployment rate at 4.9%.
However, little of the data covers the period since the result of the EU referendum. So it is not yet possible to draw any conclusions from the jobless figures about the impact of Brexit. But little of the data covers the period since the vote, so it's not yet possible to draw any conclusions about the referendum's impact.
Howard Archer of IHS Global Insight said that the UK economy showed "impressive resilience in the run-up to the EU referendum and the immediate aftermath of the vote to leave". Elsewhere, a Markit/REC survey suggested the jobs market suffered a dramatic slowdown in July, with permanent hiring dropping to levels not seen since the 2009 recession.
But there have been indications of business caution since the referendum result.
An earlier survey by Markit/REC suggested that the UK jobs market suffered a dramatic slowdown in July, with permanent hiring dropping to levels not seen since the recession of 2009.
"Demand for staff remains strong with vacancies continuing to rise, but the sharp fall in placements suggests that businesses are highly cautious," said REC chief executive, Kevin Green.
When it comes to individual firms and jobs, the picture is mixed.When it comes to individual firms and jobs, the picture is mixed.
The world's biggest security firm, G4S, warned that the UK's workforce and economic growth may shrink. The world's biggest security firm, G4S, warned that the UK's workforce and economic growth may shrink, and one of Britain's biggest banks, Lloyds, has accelerated its job cuts, axing a further 3,000 posts - although it said it had made this decision before the referendum.
Chief executive Ashley Almanza said this depended on the nature of the terms of the UK's exit from the EU, which could "result in a shortage of skills or workforce availability in the UK". Other firms have announced new jobs: pharmaceuticals firm GlaxoSmithKline is investing £275m in the UK, McDonald's is creating 5,000 new jobs, and London financial services company Tullett Prebon is creating 300 new IT jobs.
One of Britain's biggest banks, Lloyds, has accelerated its job-cutting scheme, axeing a further 3,000 posts and has doubled its planned branch closures. However, this decision was taken before the referendum.
Other firms have announced new jobs since the vote. Pharmaceuticals firm GlaxoSmithKline is to invest £275m in the UK, saying the country remains "an attractive location".
McDonald's is to create 5,000 new jobs, taking its total number of UK employees to 115,000, but says "challenging economic conditions" remain.
And London financial services company Tullett Prebon is creating 300 new IT jobs in Belfast.