Slowing growth and Brexit uncertainties have left UK households £1,500 worse off
Running down the Brexit clock makes sense for politicians seeking to manage party divisions. But it amounts to economic vandalism for UK households.
Today we learned that economic growth slowed significantly at the end of 2018, with GDP only growing by 0.2 per cent in the last three months of the year. This is around a third of the pre-crisis average rate. In December alone, the economy contracted by 0.4 per cent, with the manufacturing sector now having contracted for the last six months.
Given the slowing of global growth and heightened Brexit uncertainties, it’s unsurprising that our economy is not growing faster. But beyond our growth outlook, what’s happening to the UK’s economy deserves greater attention. Because while politicians endlessly debate Brexit, family finances are being affected in the here and now.
Weaker growth in the fourth quarter of 2018 follows a general growth slowdown since the referendum in 2016. This isn’t the recession that some unwisely predicted; rather, it’s the slow burn of an economy where productivity growth has been lower than expected. The result is that our economy is now 1.2 per cent smaller today than the OBR projected it would be before the referendum. That percentage amounts to £24 billion or £800 a year for every household in the UK. The Bank of England thinks the GDP hit is nearer 1.5 per cent, while other research finds a slightly bigger effect.
But the fact that we’re doing less well at producing stuff than expected isn’t the end of the story. In fact, household incomes have taken a much bigger hit than GDP over the past two and a half years. That’s because they have faced a second headwind: prices rising faster in shops than had been anticipated. This is the result of the tanking of …read more
Source:: New Statesman