Following the decline in manufacturing numbers, the British economy is expected to show another slowdown due to other factors. These include the lack of British trading activity which dampened market expectations of another interest rate hike from the Bank of England in the coming months.
Last week, the pound lost ground against the US dollar and the euro after the Eurozone and US economies showed signs of health and recovery after the announcement of the British exit last year.
Current Justice Secretary and Lord Chancellor David Lidington stated that the deficit in trade deals being offset by a possible trade deal between the United Kingdom and the United States will not be able to make up for the damages of the Brexit to the country’s economy.
Lidington also added that despite a possible deal between the UK and the US not being able to cushion the Brexit damages, the trade deal would be essential to the economy as well as trade deal with Asian and South American economies which would be possible due to the flexibility Brexit offers the United Kingdom after separating from the European Union. This will also allow them to be at least the fifth or sixth biggest economy in the world.
According to a report from the Office for National Statistics, trade deficits expanded by 2 billion pounds in the last three months but were above expectations although the numbers in the production sector remain the same. Manufacturing output has also declined in the past three months along with construction output.
The overall reception of this data was received as a weaker than expected result sending most investors away from riskier assets.
The decline in the services sector which happens to be a majority of the United Kingdom’s economy continues to dampen the growth of the economy while the manufacturing activity has shown small signs of recovery since the beginning of the year but remains low. These data along with the slump in the British currency is expected to weigh in on the economy further in the coming weeks until the conclusion of the Brexit negotiations which would give the markets a clearer view to where the United Kingdom’s economy stands.
The British pound has declined by 14% against the US dollar since the Brexit vote last June 2017 and 13% versus the Euro. The pound also recorded its lowest rate last week since June 28. The decline comes after disappointing trade figures in the United Kingdom. Although it hit 1.1294 against the euro on Friday, it started off at around 1.1316 and is currently up by 0.14% from the previous trading session.
Despite these, the employment rate in the country has risen by 123,000 from the increase of 43,000 in the past three months.
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