- UK Economy Falls to Bottom of EU Growth League
The United Kingdom economy was the worst performer in the European Union in the opening months of 2017 as the Brexit vote took its toll, according to official statistics that underscore the challenge facing the next British government.
With economic growth of just 0.2 per cent in the first three months of this year, the UK was well behind its European neighbours, The Guardian reported.
Official EU figures released as Britons went to the polls on Thursday showed the growth for the whole of the EU was 0.6 per cent in the first quarter.
The eurozone single currency bloc also grew 0.6 per cent in the opening quarter, buoyed by strong domestic demand.
The Eurostat figures showed every nation in the 28-member bloc reported first-quarter GDP figures growing faster than the UK. The strongest expansion was in Romania at 1.7 per cent, followed by Latvia at 1.6 per cent and Slovenia at 1.5 per cent. The closest countries to the UK’s weak pace of growth were France and Greece, with GDP growing 0.4 per cent in both.
However, in year-on-year terms the UK was closer to the EU performance and ahead of the 19-nation eurozone. After a strong second half to 2016, when the economy defied predictions of a post-referendum slump, UK GDP was still 2 per cent bigger in the first quarter of 2017 than a year earlier. The EU’s economy was 2.1 per cent bigger on the year while the eurozone was up 1.9 per cent.
Recent business surveys have suggested the UK economy has picked up some momentum in the second quarter after its slow start to 2017. But with higher inflation weighing on consumer spending, most forecasters expect growth to be lacklustre over 2017 as a whole and even weaker in 2018.
The main pressure is expected to come from higher inflation, stemming largely from the pound’s sharp fall since the Brexit vote last year. That has made the many imported goods to the UK more expensive and been passed on to consumers. Wages meanwhile have failed to keep pace with those price rises and so workers are worse off in real terms and have been cutting back.
Prospects for the 19-nation eurozone, by contrast, have brightened.
Political uncertainty has diminished now France’s presidential election is out the way, unemployment has fallen, business surveys point to solid demand and a continuing recovery in the global economy could boost exports, economists say.
The confirmation that the UK was the worst performer in the EU growth league in the first quarter follows news last week that it was also trailing behind the world’s advanced economies, with Canada registeringd stellar growth in the first three months of the year.
The outlook for the UK was tough but stronger global prospects should provide some cheer, economists said.
“Brexit has been partly to blame for slower UK growth, as higher prices due to lower sterling and uncertainty hit retail spending and the willingness of firms to invest,” said George Buckley, economist at the financial firm Nomura.
“But it’s not all bad news – this is as much a story about global strength as it is about downside risks to the UK, which should eventually support exports”