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Theresa May's legacy leaves an economy transfixed by Brexit Theresa May's legacy is an economy transfixed by Brexit
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The economic legacy left by Theresa May includes a country transfixed by Brexit and treading water amid the uncertainty, with the escalating risk of a no-deal withdrawal sapping the economy, according to a Guardian analysis.The economic legacy left by Theresa May includes a country transfixed by Brexit and treading water amid the uncertainty, with the escalating risk of a no-deal withdrawal sapping the economy, according to a Guardian analysis.
In a reflection of Britain’s current rudderless political situation, the prime minister hands over an economy that has benefited from a boost in stockpiling activity and is at record levels of employment, but has been starved of longer-term investment with companies holding back from spending on capital projects and refraining from making stronger pay settlements for British workers. In a reflection of Britain’s rudderless political situation, the prime minister hands over an economy that has benefited from a boost in stockpiling activity and is at record levels of employment, but has been starved of longer-term investment with companies holding back from spending on capital projects and refraining from making stronger pay settlements for British workers.
After six months of attempting to bulldoze her doomed Brexit deal through parliament May finally ran out of road last week, the pound recorded some of the steepest losses among major currencies for the month of May with the mounting threat of a new Tory leader pushing an overt no-deal Brexit agenda. Sterling has hit its lowest level in four months against the US dollar, at less than $1.27 on the foreign exchanges. After six months of attempting to bulldoze her doomed Brexit deal through parliament May finally ran out of road last week, the pound recorded some of the steepest losses among major currencies for the month of May with the mounting threat of a new Tory leader pushing an overt no-deal Brexit agenda. Sterling has hit its lowest level in four months against the US dollar, at less than $1.27.
Writing in the Guardian, Andrew Sentance, a former member of the interest rate-setting monetary policy committee (MPC) at the Bank of England, said: “We seem to be wandering deeper into the economic jungle and whoever takes over from Theresa May will face a major challenge of putting the economy back on an even keel.Writing in the Guardian, Andrew Sentance, a former member of the interest rate-setting monetary policy committee (MPC) at the Bank of England, said: “We seem to be wandering deeper into the economic jungle and whoever takes over from Theresa May will face a major challenge of putting the economy back on an even keel.
“If a no-deal Brexit does materialise, that will also be a negative influence on the prospects for the UK economy.”“If a no-deal Brexit does materialise, that will also be a negative influence on the prospects for the UK economy.”
To gauge the impact of Brexit on a monthly basis, the Guardian monitors eight economic indicators, along with the value of the pound and the performance of the FTSE 100.To gauge the impact of Brexit on a monthly basis, the Guardian monitors eight economic indicators, along with the value of the pound and the performance of the FTSE 100.
Economists made forecasts for seven of those barometers before their release, and in four cases the outcome was worse than expected. In three cases, better.Economists made forecasts for seven of those barometers before their release, and in four cases the outcome was worse than expected. In three cases, better.
Among the bright spots for the candidates to replace May as the third successive Tory prime minister in a decade is Britain’s record employment rate and the lowest level of unemployment since the mid 1970s. Consumers also appear to have shrugged off worries about Brexit to keep on spending.Among the bright spots for the candidates to replace May as the third successive Tory prime minister in a decade is Britain’s record employment rate and the lowest level of unemployment since the mid 1970s. Consumers also appear to have shrugged off worries about Brexit to keep on spending.
However, business leaders warn that May’s refusal to remove the threat of a no-deal Brexit in less than six-months’ time leaves the country facing severe risks.However, business leaders warn that May’s refusal to remove the threat of a no-deal Brexit in less than six-months’ time leaves the country facing severe risks.
Among the frontrunners to replace May, Boris Johnson and Dominic Raab, have both said they are willing to back leaving the EU without a deal. The installation of Johnson, the bookies’ favourite, could raise the chance of a recession later this year, analysts at the City fund manager Schroders have said.Among the frontrunners to replace May, Boris Johnson and Dominic Raab, have both said they are willing to back leaving the EU without a deal. The installation of Johnson, the bookies’ favourite, could raise the chance of a recession later this year, analysts at the City fund manager Schroders have said.
In response to the threat of no-deal Brexit, and despite low levels of unemployment, wage growth has slowed. According to the Office for National Statistics, wage growth fell to 3.3% on the year in the three months to March, from 3.5% in the three months to February.In response to the threat of no-deal Brexit, and despite low levels of unemployment, wage growth has slowed. According to the Office for National Statistics, wage growth fell to 3.3% on the year in the three months to March, from 3.5% in the three months to February.
Writing in the Guardian, David Blanchflower, also a former member of the Bank’s MPC, said all options from the Tory leadership race would likely be harmful for living standards in Britain.Writing in the Guardian, David Blanchflower, also a former member of the Bank’s MPC, said all options from the Tory leadership race would likely be harmful for living standards in Britain.
“Politics is driving the economics. Our backdrop this week is the political situation, which is just as unclear as it was a month ago,” he said.“Politics is driving the economics. Our backdrop this week is the political situation, which is just as unclear as it was a month ago,” he said.
The Guardian’s Brexit dashboard comes as GDP growth in the first three months of 2019 accelerated to 0.5% from 0.3% in the final quarter of last year, suggesting that the British economy is managing to navigate the political chaos relatively unscathed. The Guardian’s Brexit dashboard comes as GDP growth in the first three months of 2019 accelerated to 0.5%, up from 0.3% in the final quarter of last year, suggesting that the British economy is managing to navigate the political chaos relatively unscathed.
However, economists said growth was influenced by UK manufacturers rushing to stockpile goods before the original Brexit deadline on 29 March. Analysts also warn that growth could stutter as companies run down their stocks, rather than place new orders.However, economists said growth was influenced by UK manufacturers rushing to stockpile goods before the original Brexit deadline on 29 March. Analysts also warn that growth could stutter as companies run down their stocks, rather than place new orders.
“This stock build-up will ultimately unwind – creating a dampener on growth in 2020 or 2021,” Sentance said.“This stock build-up will ultimately unwind – creating a dampener on growth in 2020 or 2021,” Sentance said.
Economic policyEconomic policy
Guardian Brexit watchGuardian Brexit watch
Economic growth (GDP)Economic growth (GDP)
Theresa MayTheresa May
EconomicsEconomics
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