Has the shadow of Brexit already cost us a slice of GDP — and if so, is it a blip or an omen? The Office for National Statistics says UK growth was 0.4 per cent in the first quarter of this year, down from 0.6 per cent in last year’s final quarter. And we can’t blame the neighbours, because the eurozone upped its game from 0.3 per cent to a positively breathless 0.6 per cent — with even France trotting in ahead of us at 0.5 per cent.
We still look stronger on the jobs front, mind you, with our unemployment rate, at 5.1 per cent, well down on a year ago and at half the rate for the eurozone. And our service sector continues to perform quite well. But manufacturing showed a decline and construction plunged, with housebuilding at a 38-month low and commercial property deals subdued. International retailers and office tenants were widely reported to be reducing their investment into the UK, or making contingency plans to do so.
A Deloitte survey of corporate sentiment blamed the downbeat mood squarely on Brexit fears: ‘A fog of uncertainty has descended,’ said Deloitte’s chief economist, Ian Stewart. ‘The dominant concern is the referendum… Corporates are pulling in their horns, with expectations for hiring and capital spending at three-year lows.’ Minutes of the Bank of England’s monetary policy committee said similar things.
And April indications suggest the fog is thickening. The Markit/CIPS purchasing managers’ indices of optimism in the services, construction and manufacturing sectors registered their weakest pulse since 2013, ‘consistent with a near-stalling of economic growth’, according to Markit economist Chris Williamson. Like-for-like retail sales were down 0.9 per cent last month (the weather didn’t help). Consumer confidence indicators varied, but a survey by GfK found a 15-month low which it attributed in part to ‘mixed messages about a post-Brexit world’.
So there’s undeniably a pattern — and even though the US is also experiencing slower growth, and China’s import volumes are declining, we really can’t claim another episode of ‘global headwinds’ blowing our proud economy off course.