UK economy slows nearly to a halt as Brexit weakens demand
Last month, British economic growth has slowed so much it nearly stopped as Brexit and weaker global expansion takes its toll on the UK economy.
The UK economy grew so slowly last month that it came close to stalling, as the services sector could only muster modest growth, while British manufacturing and construction saw weak expansion as Brexit uncertainty continues to take its toll, according to a recent business survey.
The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) climbed a touch higher in May to 51.0, up from 50.4 recorded in April, registering marginally above the 50.0 no-change mark for the second consecutive month.
UK economic growth remains ‘disappointingly muted’
Even though economic growth was able to reach a three-month high in May, the pace of expansion remained ‘disappointingly muted’, according to Chief Business economist at IHS Markit, Chris Williamson.
‘The UK economy remained close to stagnation midway through the second quarter as a result, registering one of the weakest performances since 2012,’ he added.
Companies surveyed reported weak business activity and subdued order books, leading to a reluctance to hire new staff and invest in growth in both domestic and overseas markets.
‘Many businesses remain cautious in relation to spending and investing in the uncertain political environment, which is exacerbating the impact of a wider global economic slowdown on the UK,’ Williamson said.
Bank of England forecasts weak quarterly growth
Data from the Office of National Statistics (ONS) showed that the British economy grew by a relatively robust 0.5% in the first quarter of this year. But the country is unlikely to recreate that level of expansion again.
The Bank of England (BoE) has forecast that the UK economy grow by just 0.2% in the three months to June, making it far more likely to see the BoE slash interest rates than raise them year.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Trading around Brexit
Find out how the UK’s exit from the EU continues to affect traders, and discover:
- The unique opportunities in a ‘hard’ and ‘soft’ Brexit
- The markets you should be watching
- Everything that’s happened so far
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.