The United Kingdom’s economy has been in a tight spot on the several months; this August, figures showed another slowdown as exports continue to dwindle down despite weaker pounds to sustain the overseas sales. The UK’s GDP growth also manages to get caught in the blister; July’s performance showed a slow 0.2% increase.
The sluggish 0.2% data from the economic growth was down a massive 0.3% over the second quarter and is tremendously below on the country’s economy’s long-run trend which was at the 0.6%. The weaker wage growth and looming uncertainty in Brexit corrupt consumer in the quarter as well.
Service Sector’s Flunk
One of the main reasons for the sluggish run was the weakening service sector activity; according to the National Institute for Economic and Social Research’s Amit Kara, “The service sector, which was the main driver for economic growth in the second quarter, appears to have slowed,” and “We see a modest recovery in the second half of this year in response to strengthening global growth and a weaker currency, but on the flip side, consumer spending is likely to be weighed down by weak wage growth and investment spending held back by Brexit-related uncertainty.”
Exports data were expected to recover last June, a lot of investors and analysts were anticipating that the UK economy can cut deep in the second half of the year and emerge as a stronger economic growing country; but according to the Office for National Statistics, exports actually fell in June while manufacturing output remained stagnant.
Trade deficit managed to expand to 4.6 billion pounds in June and tramples most forecasts and expectations that the market and most analysts predicted that it would slump and shed a good 2.5 billion pounds; according to statistics, this is the biggest monthly deficit for 2017.
Exports, Weaker Pound Expectations and More
Most business surveys that were conducted have specified that most local business and brands are having an incremental increase on their overseas demands; this is because of the sudden bearish run the pound has been experiencing which pushes British goods on a competitive price mark. Along with the expected export growth; the surging global economy is forecasted to give an ample boost in overseas exports, although the effect is yet to be felt.
The service sector’s sluggish performance has pulled the economic growth down, although the construction output also manages to drag the economy down last month. The construction output dips by a total of 0.1% and a whopping 1.3% in the quarter; the weak housing market and the fear of expanding to advanced and contemporary properties.
The only silver lining the UK economy was with its oil industry, the growing output manages to create an increase in overall output which is distributed then to other industries such as energy, mining, and utilities. The overall increase in the industry was at 0.5%, trampling forecasts of 0.1% increase.
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