The UK has avoided a feared economic downturn for the time being, but there is still no sign of growth. In the last quarter, the economy stagnated compared to the third quarter. The country has long been grappling with high energy prices and labor shortages, which has caused a huge slowdown in economic activity.
Stefan Koopman, UK economist at Rabobank, expects the country will certainly feel the long-term consequences of inflation. “It always takes a while for inflation to start having an impact on consumer behavior,” says Koopman.
Brexit
The British seem to be feeling the influence of Brexit more and more. The American Bloomberg recently published figures showing that Brexit costs the UK 114 billion euros a year. Also, according to Bloomberg, the economy would have been 4% bigger if Brexit hadn’t taken place.
The consequences of Brexit are particularly visible in the investment and consumer sectors. “The uncertainty Brexit brings has meant that investment in the country hasn’t grown since Brexit started in 2016,” says Koopman.
The latest poll shows that two-thirds of voters want a new referendum on EU membership, but British Prime Minister Sunak still doesn’t want to hear about it.
Broader economic problems
Brexit isn’t the only cause of Britain’s economic woes. The whole of Europe has to deal with high inflation due to the war in Ukraine and aging is also a structural problem. “Very simple, if you work less as a country, you can end up consuming less,” says Koopman.
Central bank
Britain’s central bank is doing everything it can to limit inflation. The interest rate in the country was recently raised to 4%. According to Koopman, this could have a negative impact on economic growth. “If they keep raising interest rates more and more, they will completely compress the economy,” says the economist.
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
