As the proceedings of the British exit continues and pushes further, the economy of the United Kingdom remains on an unstable ground. Aside from the declining Sterling, Britain’s retail sector is now hovering around its lowest level since 2013. Despite improving retail sales numbers in the country, investors have been pointing to the uncertainty of the Brexit proceedings to the weak economic growth of Britain.
UK Retail and Unemployment
In September, retail sales numbers in the United Kingdom improved significantly as consumer spending on items such as food and clothing rose despite the ongoing market issues regarding Brexit. During the same period, the Sterling has been noted to have declined which was not expected to result in a rise in consumer spending as well as retail sales.
As the market shrugged off the weak British currency, the outlook for the sales of food and clothing items improved while sales numbers from items aside from those mentioned above declined by as much as 2%. Despite this, retailers and merchants have kept most prices on hold that led to the market speculation of a possible rate hike before the end of the year.
Labor reports also supported the market claims of the negative effects of the Brexit as jobs data declined further in the past months and has failed to show a slight improvement. The rate of jobless claims is currently unchanged at 4.3%. This also did not lead to employees or workers getting wage increases with average pay with bonuses rising only 2.1% for the quarter that ended in August lower than the July quarter rise of 2.2% in average pay numbers. However, these increase pay growth rate were higher than most expectations of 2% from most economists.
U.K.’s cost of living rate has also transitioned into the fastest yearly rate since the last couple of years with the consumer price index rallying to 3% in September from having previously risen up by 2.9% from the previous month. The Bank of England stated that the cause of this was due to Sterling’s decline since the U.K voted to leave the European Union.
British Economy Direction
At the beginning of the week, British finance minister Philip Hammond stated that the economy is close to hitting full capacity in answer to being questioned regarding the use of public money in financing homebuilding. According to Hammond, the construction sector activity which has increased recently is going to help in the creation of jobs.
Just recently, the Bank of England has hinted that they are planning to raise interest rates for the first time in a decade due to the recent economic performance of the country.
The Bank of England governor Mark Carney is said to have been preparing to raise interest rates due to the current economic growth numbers. Last year, the central bank implemented an emergency rate cut from 0.5% to 0.25% in their efforts to avoid a Brexit-led recession.
The markets are currently demanding for an agreement with the European Union that would allow business to trade the same as the pre-Brexit period even after the Brexit Day in March 2019.
This is FSM News bringing you the freshest and biggest market updates. We provide in-depth analysis and detailed news stories to keep investors constantly informed in this fast-paced, dynamic industry. Read more from us and be updated!