The United Kingdom's economy looks to set to record its lowest levels of economic growth outside of recession since the Second World War amid uncertainty over Brexit and instability caused by the snap election, The Guardian reported on Friday, citing numerous financial indicators
MOSCOW (Pakistan Point News / Sputnik - 27th December, 2019) The United Kingdom's economy looks to set to record its lowest levels of economic growth outside of recession since the Second World War amid uncertainty over Brexit and instability caused by the snap election, The Guardian reported on Friday, citing numerous financial indicators.
According to the UK newspaper, the private sector has been hit hard by the economic uncertainty caused by the United Kingdom's exit from the European Union. Job growth has been concentrated in the public sector, while private companies have cut employment opportunities and slashed wage growth, the newspaper stated.
The Bank of England (BoE) announced on December 19 that the UK's Gross Domestic Product (GDP) would grow by just 0.1 percent in the fourth quarter of 2019, after rising 0.3 percent in the previous quarter. One day later, BoE External Member of the Monetary Policy Committee, Jonathan Haskel, said in a speech that Brexit uncertainty was reducing investment in the UK economy.
This uncertainty looks set to increase during 2020, after UK Prime Minister Boris Johnson's Brexit Withdrawal Bill passed its second reading in a vote in the House of Commons last week. The amended bill included a new provision that ruled out any extension of the withdrawal transition period beyond December 31, 2020. This will give the UK just one year to sign a complex trade agreement with the European Union.
There are some signs of optimism for the UK economy, the newspaper reported. Since Johnson's re-election and the passing of the Brexit Withdrawal Bill in the Commons, both pound sterling and the UK stock market, the FTSE 100, have made strong gains.
However, the newspaper stated that many market gains can be attributed to an apparent breakthrough in US-China trade talks, while also citing that the service sector, which accounts for 80 percent of the UK's economy, failed to record any growth for the third month in a row. At the same time, manufacturing and construction output dropped, the outlet added.
According to data from the World Bank, UK GDP growth has slowed since the 2016 Brexit referendum. In 2015, UK GDP growth was 2.4 percent, but this value has fallen steadily over the past four years. The UK's economy grew by just 1.4 percent last year.
Johnson led the Conservative Party to a comprehensive general election victory on December 12. The Tories won 365 of 650 seats in the House of Commons, backed by a manifesto that pledged to finally break the parliamentary deadlock surrounding Brexit negotiations, as well as increase funding in public services. Johnson has vowed to boost NHS spending, employ tens of thousands of new police officers and nurses.
