UK Sees Biggest Economic Slowdown In Nearly A Decade

The U.K. economy ducked a recession but the economy grew at its slowest annual rate since the third quarter in 2010, Reuters reported on Monday (Nov. 11).

Economic output grew 0.3 percent compared with the previous quarter, according to data from the Office for National Statistics released on Monday. Economists polled by Reuters had forecast a 0.4 percent expansion.

“The fact that the government will be celebrating 0.1 percent growth in the last six months is a sign of how low their hopes and expectations for our economy are,” Labor prospective parliamentary candidate (PPC) for Hayes and Harlington John McDonnell said in a tweet.

Even if Prime Minister Boris Johnson passes Brexit ahead of the Jan. 31 deadline, economists expect the Bank of England (BoE) to cut interest rates in 2020.

“Narrowly avoiding a recession is nothing to celebrate,” Tej Parikh, an economist at the Institute of Directors, told the news outlet. “The U.K. economy has been in stop-start mode all year, with growth punctuated by the various Brexit deadlines.”

The U.K. economy has been highly volatile this year, largely underperforming the eurozone in the second quarter and only marginally outperforming it in the third quarter. The overall economy usually grew more than 2 percent annually but lost muscle since the 2016 Brexit referendum. 

“The BoE forecasts an investment rebound if a Brexit deal removes no-deal risk but we think this is optimistic,” Nancy Curtin, chief investment officer at Close Brothers, said in the report.

A May survey of British retailers by the Confederation of British Industry (CBI) said retailers were witnessing the poorest sales performance this month in 10 years. The survey’s retail sales balance dropped to -27 this month from +13 in April, which is under all forecasts in a similar Reuters poll and also the lowest since the end of 2017.

The CBI said that if the results are adjusted for the time of year, then sales are the lowest since March of 2009.

Also, a semiannual measurement of investment intentions by retailers was at its lowest point since the survey was started in 1983.