Highlights
- The UK economy quarterly GDP lowest after 2012
- Consumer spending rate is positive
- Brexit has started to affect the UK economy
- Uncertainty in the stock market due to the trade war between the US and China
The newly elected prime minister of the UK- Boris Johnson is in a great dilemma as he is facing a complicated situation because of the Brexit negotiations, especially when the UK economy is on the verge of facing a recession and when the global economy is witnessing a great slump. Currently, the prime minister is having difficulties in resolving the matters and breaking the gridlock with the Brussel (headquarter of Europe Union) by discussing the no-deal Brexit matter.
As the economy is deteriorating both at home and abroad, this might be really the worst time for the UK to leave the EU. According to the survey the quarterly GDP growth fell for the first time after 2012 and other global events such as the extensive trade war between the two major economies the US and China is also affecting the global trade volume and thus the economic growth. Well, this fall in the global economy might cause Britain to suffer a prolonged plunge in the coming years and has made it more difficult for the UK to rely on other nations in order to give a thrust to its economy after Brexit.
The impact on the business sectors
Well, many experts believe that the majority of the business running in the UK is still not completely prepared to face the aftermath consequences of the Brexit. On the current scenario, business groups are just waiting for the final decision of the government when the UK will be leaving the Europe union that has been just postponing over and over again.
The top economists of the country recently just observed the eight crucial aspects that involved the performance of the pound currency in the market and FTSE. Unfortunately, the result was quite disappointing. The economist found that out of seven aspects, four aspects performed worse than expected. Many businesses are now refusing to invest much in the market because of the confusion.
The Silver lining in the cloud
However, there were some bright spots because it was found that the consumers are still contributing in the growth of the economy and there was a positive response in terms of spending. As per the survey that was done by the office for national statistics, the consumer spending rate witnessed a slight growth of 0.2 % from the month of June. Also, the average wage of the worker grew at the rapid pace (highest in the 11 years)
The unemployment rate also increased to overall 3.9% which is a clear indication that the slowdown in the global economy and the risk arising due to Brexit will have a significant impact in the job market. Well, the lending industry is also working hard to help the people in financial distress as today jobless people can get guaranteed payday loan from a direct lender even with bad credit. This type of immediate funding can be very helpful for the people who are unemployed or who are facing financial crisis due to the slouch in the business market.
The effect on the economy of the UK
Yes, it is true that no alerting news has been there from the consumer spending pattern, but despite that, the economy of Britain witnesses a quarterly slump which is the first time since the year 2012. There are various factors behind this including uncertainty of the Brexit, sifting of many major world-leading companies, the shutdown of several car plants have lead to the overall fall in the GDP quarter wise.
Now, two consecutive quarterly falls in the GDP growth of the UK economy which will be ultimately confirmed after Britain has actually left the Europe Union could be a clear indication of the of a technical recession. Boris Johnson has already started taking necessary steps required to prepare the UK economy for the no-deal Brexit, by ramping up the public spending by £ 2.1bn in various preparations such as stockpiling of medicines and other valuable things and also conducting a public awareness campaign about disruption. Still, there will be a possibility that the prime minister will most probably increase the government’s budget target for the upcoming year overall by £8bn, by considering the fact that he has increased public borrowing.
The uncertainty in the stock market
The stock market is currently in bad shape and is facing uncertainty which is the result of the mainly the trade war that has forced other nations to deliberately limit their exports and imports. Now, this could create trouble for the UK to get trade deals outside the Europe Union.
