Home > News > Forex News > Detail
Bookmark and Share

UK macro outlook: Brexit taking its toll on the economy – Danske Bank

2019-12-11 14:41    FXYEAH

Analysts at Danske Bank presented an update on the UK macro outlook and expect that the growth will remain in the 1.0-1.5% range over the coming years.

Key Quotes:

Brexit continues to take its toll on the British economy. Although the first estimate of GDP growth in Q3 showed that it grew by 0.3% q/q, GDP declined in both August and September. Looking at the annual growth rate, GDP growth is at its lowest since the European debt crisis in 2011-13. The PMIs in October were not encouraging and signalled a weak beginning to Q4.”

“The prolonged Brexit uncertainty has mainly hit businesses and not so much consumers. Private consumption remains the main growth driver although it is not growing as fast as a couple of years ago. The UK is still in an investment recession although business investments were flat in Q3. Around 55% of the companies think Brexit is among the top three sources of uncertainty and many companies have postponed investments decisions due to Brexit. With Brexit postponed once again, the outlook for business investments still looks weak. It does not help that growth in the rest of the world has slowed due to (among other things) the ongoing US-China trade war. Hopefully, this will soon be resolved.”

“Even if we assume Brexit happens soon, we do not expect investments to kick off, as businesses still do not know what the future relationship will look like. These negotiations are only about to start when the UK leaves the EU formally, and they are going to be much more complicated than the negotiations on the withdrawal terms. It could be that we are too pessimistic here and that companies may start to invest in more projects than they had postponed due to Brexit.”

“We are having a hard time seeing much higher growth over the forecast horizon and think growth will remain in the 1.0-1.5% range over the coming years (against 2.0-3.0% before Brexit was a theme). We will probably not surprise anyone in saying that Brexit makes it difficult to make precise forecasts for the economy, in particular with the stockpiling ahead of the Brexit deadlines.”

“We forecast GDP growth of 1.4% this year, 1.0% in 2020 and 0.9% in 2021 but stress that Brexit remains a big source of uncertainty.”


0 traders reviewed this item, please leave a reply!

About FXYEAH | Broker Listing | Contribute | Contact Us | Sitemap | TagCloud
Disclaimer: All contents of site are only for your reference, don't suggest you do any investment decision, you should be responsible for your decision.