The latest economic growth figures for the UK have been revised lower by the ONS meaning that Britain was the slowest growing major economy last year. The pound has fallen below the 1.39 level against the US dollar today to trade at its lowest in over a week, although this decline is also due in part to a resurgence in the buck following last night’s release of the Fed minutes. US stock markets experienced a fairly sharp move lower after it appears that the US central bank could move faster than the market currently expects in raising rates and this has had a negative impact in London this morning with the FTSE 100 off by almost 1%.
UK lags its peers
This morning’s data reaffirms what many already believed regarding the UK economy, that while it is growing at a fair rate is relative performance continues to lag its peers and it is apparent that Brexit uncertainty is subduing business activity. Wednesday’s inflation report hearings saw MPC members including Governor Carney state that due to an understandable propensity amongst business owners to delay irreversible investment decisions until more clarity is available on their operating environment post-Brexit the country is currently running with a lower speed limit than is possible. Continuing the driving analogy it appears that the UK is travelling at a relatively high speed compared to prior years but that it has yet to find top gear.
Decision day for Brexit stance?
A cabinet summit later today is being earmarked by some as pivotal in ironing out the differences in views amongst Westminster’s top officials so that the government can finally decide on their Brexit position. Whilst this would certainly be a pleasing development and aid businesses in providing greater clarity on at least what the government is aiming for, it is unlikely to provide a real breakthrough moment. It may serve rather as a timely, and pretty alarming, reminder that we’re approaching the mid-point of the two-year Article 50 window and the government has still failed to outline what exactly they want from the negotiations regarding post-Brexit Britain.