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 http://www.theguardian.com/business/2017/aug/23/growth-uk-brexit-data-consumer-squeeze
The article has changed 5 times. There is an RSS feed of changes available.
| Version 3 | Version 4 |
|---|---|
| 'Growth is slowing in the UK, but picking up elsewhere' – experts debate Brexit data | 'Growth is slowing in the UK, but picking up elsewhere' – experts debate Brexit data |
| (3 days later) | |
| David Blanchflower | David Blanchflower |
| Professor of economics at Dartmouth College, New Hampshire, and member of the Bank of England’s monetary policy committee from June 2006 to May 2009 | Professor of economics at Dartmouth College, New Hampshire, and member of the Bank of England’s monetary policy committee from June 2006 to May 2009 |
| Unemployment fell by 11,000 on the month but there was a rise in underemployment – measured as part-timers who want full-time jobs – of 14,000. Also there was a big fall in the number of workers from eastern Europe. For the third month in a row real wages – that is, wage rises adjusted for prices changes – declined, this time by 0.5% for June. Even though CPI inflation was 2.6%, wage growth was only 2.1%. Between April and June real pay was down 1.4%, which means a sharp fall in living standards. Hence retail sales remain weak as consumers are squeezed by the fall in their living standards. | Unemployment fell by 11,000 on the month but there was a rise in underemployment – measured as part-timers who want full-time jobs – of 14,000. Also there was a big fall in the number of workers from eastern Europe. For the third month in a row real wages – that is, wage rises adjusted for prices changes – declined, this time by 0.5% for June. Even though CPI inflation was 2.6%, wage growth was only 2.1%. Between April and June real pay was down 1.4%, which means a sharp fall in living standards. Hence retail sales remain weak as consumers are squeezed by the fall in their living standards. |
| The main driver behind this has been the Brexit vote which lowered the pound and increased prices. The claims by some rightwing economists that a free trade nirvana will emerge if there is a hard Brexit has been rightly met this week by incredulity by the economics profession. A letter from 290 prominent economists written a year ago, debunking these claims is relevant here. It turns out that there is a huge disparity between the overwhelming majority of economists that say we would be worse off with Brexit and the handful that say otherwise. | The main driver behind this has been the Brexit vote which lowered the pound and increased prices. The claims by some rightwing economists that a free trade nirvana will emerge if there is a hard Brexit has been rightly met this week by incredulity by the economics profession. A letter from 290 prominent economists written a year ago, debunking these claims is relevant here. It turns out that there is a huge disparity between the overwhelming majority of economists that say we would be worse off with Brexit and the handful that say otherwise. |
| There was other related bad news, including a worsening of the UK’s trade performance. Despite a boost in exports from the lower pound, this was matched by the trade in goods deficit widening unexpectedly to £12.7bn, from £11.3bn in May. Exports fell by 2.8% but imports rose by 1.6%, according to the Office for National Statistics. It was the biggest deficit in nine months and much wider than economists’ forecasts of £11bn. | There was other related bad news, including a worsening of the UK’s trade performance. Despite a boost in exports from the lower pound, this was matched by the trade in goods deficit widening unexpectedly to £12.7bn, from £11.3bn in May. Exports fell by 2.8% but imports rose by 1.6%, according to the Office for National Statistics. It was the biggest deficit in nine months and much wider than economists’ forecasts of £11bn. |
| The move of the public finances to positive territory for the first time in a decade was a brief respite that will not continue. For the year public sector net borrowing at £22.8bn in the four months to July is nearly £2bn higher than it was a year ago. | The move of the public finances to positive territory for the first time in a decade was a brief respite that will not continue. For the year public sector net borrowing at £22.8bn in the four months to July is nearly £2bn higher than it was a year ago. |
| Andrew Sentance | Andrew Sentance |
| Senior economic adviser at the PwC consultancy and member of the Bank’s MPC from October 2006 to May 2011 | Senior economic adviser at the PwC consultancy and member of the Bank’s MPC from October 2006 to May 2011 |
| The most recent economic data has not fundamentally changed the post-Brexit picture for the UK economy. Growth is slowing in the UK, while it is picking up elsewhere in the EU. There are two obvious reasons why this is the case. First, Brexit is adding to uncertainty about investment decisions and other long-term economic commitments. Second, inflation has risen because the pound has fallen, and this is squeezing consumers’ purchasing power. Normally, we would expect a recovery in the other EU economies to benefit the UK. Because of Brexit, growth in the UK and other EU economies are now moving in opposite directions. | The most recent economic data has not fundamentally changed the post-Brexit picture for the UK economy. Growth is slowing in the UK, while it is picking up elsewhere in the EU. There are two obvious reasons why this is the case. First, Brexit is adding to uncertainty about investment decisions and other long-term economic commitments. Second, inflation has risen because the pound has fallen, and this is squeezing consumers’ purchasing power. Normally, we would expect a recovery in the other EU economies to benefit the UK. Because of Brexit, growth in the UK and other EU economies are now moving in opposite directions. |
| The pound is now extremely weak in historical terms. Since the euro was launched in 1999, sterling has never been below €1.10 and $1.30 at the same time until this month. The devalued pound does not seem to be boosting exports, but it is eroding living standards and squeezing consumer spending. | The pound is now extremely weak in historical terms. Since the euro was launched in 1999, sterling has never been below €1.10 and $1.30 at the same time until this month. The devalued pound does not seem to be boosting exports, but it is eroding living standards and squeezing consumer spending. |
| The UK continues to look good in terms of employment, but employment is growing faster in continental Europe. In my view, it is likely that UK unemployment will rise over the next year, as growth is slowing, while the jobless total will continue to fall elsewhere in the EU. Over the recovery following the global financial crisis, the UK has been one of the better-performing economies until now. That may now be about to change, as other EU economies gather momentum and the UK economy falters. | The UK continues to look good in terms of employment, but employment is growing faster in continental Europe. In my view, it is likely that UK unemployment will rise over the next year, as growth is slowing, while the jobless total will continue to fall elsewhere in the EU. Over the recovery following the global financial crisis, the UK has been one of the better-performing economies until now. That may now be about to change, as other EU economies gather momentum and the UK economy falters. |
| Economics | Economics |
| Guardian Brexit watch | Guardian Brexit watch |
| Brexit | Brexit |
| European Union | European Union |
| Europe | Europe |
| comment | comment |
| Share on Facebook | Share on Facebook |
| Share on Twitter | Share on Twitter |
| Share via Email | Share via Email |
| Share on LinkedIn | Share on LinkedIn |
| Share on Pinterest | Share on Pinterest |
| Share on Google+ | Share on Google+ |
| Share on WhatsApp | Share on WhatsApp |
| Share on Messenger | Share on Messenger |
| Reuse this content | Reuse this content |