This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/2017/feb/22/brexit-economy-consumers-uk-eu

The article has changed 3 times. There is an RSS feed of changes available.

Version 1 Version 2
Brexit economy: can consumers keep shoring up the UK? Brexit economy: can consumers keep shoring up the UK?
(about 1 hour later)
Rising fuel and food prices are eating into household budgets as the impact of the Brexit vote on the value of the pound pushes up inflation, according to a Guardian analysis that casts doubt over how much longer consumers can continue to shore up the UK economy.Rising fuel and food prices are eating into household budgets as the impact of the Brexit vote on the value of the pound pushes up inflation, according to a Guardian analysis that casts doubt over how much longer consumers can continue to shore up the UK economy.
Cracks are starting to show in the picture of economic resilience seen since last summer’s vote to leave the EU. Wage growth is slowing just as people’s living costs start taking off. Businesses are also feeling the pressures of the weak pound more intensely as it ramps up the cost of imported raw materials and energy while failing to provide the anticipated boon for exporters.Cracks are starting to show in the picture of economic resilience seen since last summer’s vote to leave the EU. Wage growth is slowing just as people’s living costs start taking off. Businesses are also feeling the pressures of the weak pound more intensely as it ramps up the cost of imported raw materials and energy while failing to provide the anticipated boon for exporters.
Eight months on from the referendum, the Guardian’s monthly tracker of economic news shows business activity across a broad range of sectors has lost momentum, retail sales have fallen for three straight months and pay growth has slipped back despite the lowest unemployment rate for more than a decade.Eight months on from the referendum, the Guardian’s monthly tracker of economic news shows business activity across a broad range of sectors has lost momentum, retail sales have fallen for three straight months and pay growth has slipped back despite the lowest unemployment rate for more than a decade.
To gauge the impact of the Brexit vote on a monthly basis, the Guardian has chosen eight economic indicators, along with the value of the pound and the performance of the FTSE.To gauge the impact of the Brexit vote on a monthly basis, the Guardian has chosen eight economic indicators, along with the value of the pound and the performance of the FTSE.
The dashboard for February shows a worse than expected performance in three of the eight categories. Two were better than expected and unemployment was as expected. The public finances undershot economists’ forecasts in January, but mainly because of a change in a way the Office for National Statistics accounts for tax revenues. Inflation continued to rise but by less than economists had forecast. The dashboard for February shows a worse than expected performance in three of the eight categories. Two were better than expected and unemployment was as expected. The public finances undershot economists’ forecasts in January, but mainly because of a change in a way the Office for National Statistics (ONS) accounts for tax revenues. Inflation continued to rise but by less than economists had forecast.
At 1.8% inflation was the highest since mid-2014 and is expected to rise further this year thanks to higher crude oil prices and rising import costs. The latest official snapshot of living costs showed fuel cost 17% more this January than a year ago, the steepest price rise for more than five years.At 1.8% inflation was the highest since mid-2014 and is expected to rise further this year thanks to higher crude oil prices and rising import costs. The latest official snapshot of living costs showed fuel cost 17% more this January than a year ago, the steepest price rise for more than five years.
Consumers also had to pay more for many groceries as a long period of food price deflation appeared to be petering out. Fish, cooking fats, fruit and sugary foods were all more expensive compared with January 2016. But meat, dairy products and vegetables were still cheaper.Consumers also had to pay more for many groceries as a long period of food price deflation appeared to be petering out. Fish, cooking fats, fruit and sugary foods were all more expensive compared with January 2016. But meat, dairy products and vegetables were still cheaper.
Data published alongside the inflation figures showed manufacturers’ fuel and material costs were rising at the fastest pace for more than eight years in January, jumping more than 20% on the year, and companies passed some of that on to customers.Data published alongside the inflation figures showed manufacturers’ fuel and material costs were rising at the fastest pace for more than eight years in January, jumping more than 20% on the year, and companies passed some of that on to customers.
Fanning concerns about household budgets, wage growth missed expectations in the final quarter of 2016. The 2.6% year-on-year rise in average weekly earnings was still ahead of inflation but as the gap narrows there are warnings that incomes could soon be falling again in real terms. For December alone, wage growth slowed dramatically to 1.9%.Fanning concerns about household budgets, wage growth missed expectations in the final quarter of 2016. The 2.6% year-on-year rise in average weekly earnings was still ahead of inflation but as the gap narrows there are warnings that incomes could soon be falling again in real terms. For December alone, wage growth slowed dramatically to 1.9%.
Writing in the Guardian, a former member of the Bank’s monetary policy committee (MPC), David Blanchflower said it was no surprise to see a tighter squeeze on households translate into falling sales in the shops. Writing in the Guardian, a former member of the Bank of England’s monetary policy committee (MPC), David Blanchflower, said it was no surprise to see a tighter squeeze on households translate into falling sales in the shops.
“Hurt is returning for workers who inevitably will have to cut their spending,” said Blanchflower, professor of economics at Dartmouth College in the US.“Hurt is returning for workers who inevitably will have to cut their spending,” said Blanchflower, professor of economics at Dartmouth College in the US.
“Prices rising, real wages and retail sales falling is not a good start to 2017.”“Prices rising, real wages and retail sales falling is not a good start to 2017.”
The pressure on household finances bodes ill for the wider economy where consumer spending has been the main driver of relatively robust growth, helping the UK outperform all the other Group of Seven (G7) advanced economies last year.The pressure on household finances bodes ill for the wider economy where consumer spending has been the main driver of relatively robust growth, helping the UK outperform all the other Group of Seven (G7) advanced economies last year.
Figures today confirmed that the economy finished 2016 on a strong note, with the GDP growth rate for the fourth quarter nudged up to 0.7% from 0.6% as manufacturers and construction firms enjoyed a a December bounce.Figures today confirmed that the economy finished 2016 on a strong note, with the GDP growth rate for the fourth quarter nudged up to 0.7% from 0.6% as manufacturers and construction firms enjoyed a a December bounce.
More timely indicators suggest rising labour, material and transport costs took their toll in companies in January, and growth slowed in the manufacturing, construction and services sectors. There was bad news for retailers in January as sales volumes dropped amid evidence higher prices made shoppers cut back.More timely indicators suggest rising labour, material and transport costs took their toll in companies in January, and growth slowed in the manufacturing, construction and services sectors. There was bad news for retailers in January as sales volumes dropped amid evidence higher prices made shoppers cut back.
Economic forecasters are cautious, however, about predicting anything more than a modest slowdown in 2017 after consistently being proved wrong in the months after the referendum.Economic forecasters are cautious, however, about predicting anything more than a modest slowdown in 2017 after consistently being proved wrong in the months after the referendum.
The Bank of England surprised markets this month by raising its forecast for growth this year to 2% from 1.4% as it was again forced to concede it had been overly gloomy following the Brexit vote. The Bank surprised markets this month by raising its forecast for growth this year to 2% from 1.4% as it was again forced to concede it had been overly gloomy following the Brexit vote.
It still sees higher prices weighing on consumer spending and expects economic growth to slow to just 1.6% in 2018. Those worries are seen pushing policymakers to keen interest rates at the record low of 0.25% well into next year.It still sees higher prices weighing on consumer spending and expects economic growth to slow to just 1.6% in 2018. Those worries are seen pushing policymakers to keen interest rates at the record low of 0.25% well into next year.
There was some upbeat news in the latest batch of economic indicators. Britain’s trade position improved in the final quarter of the year, helped by a rise in exports to non-EU countries. But the Office for National Statistics said there was little evidence so far of a boost to exports from a weaker pound, which in theory makes UK goods more competitive in overseas markets. There was some upbeat news in the latest batch of economic indicators. Britain’s trade position improved in the final quarter of the year, helped by a rise in exports to non-EU countries. But the ONS said there was little evidence so far of a boost to exports from a weaker pound, which in theory makes UK goods more competitive in overseas markets.
The weak pound, which has dipped again this month, does appear to be helping tourism, however, with a record number of overseas visitors to the UK in 2016.The weak pound, which has dipped again this month, does appear to be helping tourism, however, with a record number of overseas visitors to the UK in 2016.
House prices also beat economists’ expectations in January, as growth rebounded following a December slowdown.House prices also beat economists’ expectations in January, as growth rebounded following a December slowdown.
Finally, in a boost to Philip Hammond ahead of his first budget as chancellor next month strong tax receipts helped improve the public finances in January and left him on track bring the deficit down more than previously hoped over the full financial year. Finally, in a boost to Philip Hammond ahead of his first budget as chancellor next month strong tax receipts helped improve the public finances in January and left him on track to bring the deficit down more than previously hoped over the full financial year.
Andrew Sentance, also a former member of the MPC, said those relatively strong tax receipt figures reflected the picture in the second half of last year of stronger than expected growth driven by consumer spending and a resilient world economy.Andrew Sentance, also a former member of the MPC, said those relatively strong tax receipt figures reflected the picture in the second half of last year of stronger than expected growth driven by consumer spending and a resilient world economy.
“But the evidence from the data for the first month of this year is more uncertain,” added Sentance, a senior economic adviser at the consultancy PwC.“But the evidence from the data for the first month of this year is more uncertain,” added Sentance, a senior economic adviser at the consultancy PwC.
The labour market was showing signs of slowing and inflation would continue to rise, he said.The labour market was showing signs of slowing and inflation would continue to rise, he said.
“All this suggests that the consumer will be much less supportive of growth this year than last, and this will add to the impact of increased uncertainty on investment spending.”“All this suggests that the consumer will be much less supportive of growth this year than last, and this will add to the impact of increased uncertainty on investment spending.”