The most recent ONS data paints a worrying picture for post-Brexit trade. The sharp post-Brexit fall in the value of the pound should theoretically make British exports more competitive, as they become more cost competitive overseas, and UK made products more competitive domestically. The trade deficit increased and industrial output contracted more than was forecast during March, as the economy saw a sluggish growth in exports was coupled with a large increase in imports.
Industrial output dropped by 0.5% in March, 0.2 points more than the previously forecast 0.3% drop. Industrial output fell by 0.7% in February, and has grown just 0.1% for the first quarter of the year according to ONS figures.
Where it was hoped the post-Brexit fall in the value of the pound would increase exports and reduce imposts, imports surged by an additional £2.9bn in March. Both imports from EU and non-EU countries were up.
The broad services and goods deficit jumped to £4.9bn in March from £2.6bn in February. Exports rose by just £600m.
It is feared that when the UK finally breaks from the EU, in 2019 subject to Article 50 negotiations, the forces restricting UK growth could be amplified.
The Prime Minister Theresa May is tasked with securing a deal with the EU, which is becoming increasingly important. Many fear that the anti-European rhetoric from the Government is making the prospect of a comprehensive deal less likely. Recent election results amongst the other 27 EU member states, including pro-EU Macron’s victory in the French election, who is very pro-EU, might strengthen the EU’s resolve in the negotiations with the UK.
The uncertainty over Brexit appears to be grinding the economy to a halt and a turnaround in the next quarter is essential, however that looks unlikely.BLOG COMMENTS POWERED BY DISQUS