Legion Troll
A fine upstanding poster
WEAK AND GETTING WEAKER
Britain’s vote on its future in the European Union is diverting attention from deeper economic problems.
As the country thrashes about in an identity crisis, risking a schism with its main trading partner, growth is losing momentum and continues to be lop-sided.
Services, the engine of the economy’s recovery, expanded at the weakest pace in almost a year in the first quarter, while industrial production extended its decline.
That underscores the fragility of the economy at a time when the Bank of England is warning uncertainty stemming from the June 23 referendum may already be having an effect.
Added to that, some of the nation’s biggest companies are in crisis, with two retailing stalwarts appointing administrators in the past week and Tata Steel’s move to sell its U.K. business raising questions about the future of British industry.
“The U.K. economy would have probably been moderating regardless of any Brexit uncertainty,” said Simon Wells, an economist at HSBC Holdings Plc in London. “If, or when, the near-term uncertainty lifts we’ll be right back to the same old puzzles.”
There may also be a risk of consumer fatigue. With the savings rate at a record low, households may at some point start to think about their own reserves and curtail spending. The Confederation of British Industry’s retail sales fell to its lowest level in more than four years this month.
“It appears that the economy has hit a speed bump.” said Azad Zangana, an economist at Schroders in London. “Growth is likely to remain sluggish until the result of the referendum is known.
If the U.K. votes to remain in the EU then growth is likely to accelerate significantly in the second half of the year.
If, however, the U.K. votes to leave, then growth is likely to slow further on the back of the added uncertainty.”
http://www.bloomberg.com/news/articles/2016-04-27/brexit-shadow-hides-deeper-cracks-in-u-k-economic-firmament