Loading...
The Financial Express

Brexit vote leaves its impact on UK economy


The Union Flag and a European Union flag fly near the Elizabeth Tower, housing the Big Ben bell in Parliament Square in central London, Britain. 	— Reuters The Union Flag and a European Union flag fly near the Elizabeth Tower, housing the Big Ben bell in Parliament Square in central London, Britain. — Reuters

Britain was the weakest Group of Seven economy over the course of 2017 in terms of overall growth, and there are other ways that the vote to leave the European Union has left its mark too, reports Reuters.

Below are a few examples of the impact of the 2016 Brexit vote.

For a previously published set of Reuters graphics on the impact of Brexit on headline economic indicators, click here:

Net migration of European Union citizens into Britain almost halved in the 12 months to September, official data shows.

Immigration was a reason many Britons voted to leave the EU, but industry groups worry that Britain is becoming a less attractive destination for the workers they want - particularly in sectors such as engineering, construction and healthcare.

Google search data suggest the number of people in other EU countries looking online for jobs in Britain has hit a new low.

Britain has long lagged other countries in terms of investment.

While the Bank of England expects business investment to pick up this year, it remains muted considering the strength of the global economic upswing. BoE Governor Mark Carney has said Brexit explains the weak growth in investment in Britain.

Compared with their peers in the big EU economies, British manufacturers are the least likely to prioritize the kind of investments that improve the efficiency of their production, according to a long-running European Commission survey.

By contrast, British factories are also most likely to be simply replacing worn-out machinery, itself a consequence of weak prior investment, the survey has shown.

The weakness of long-term investment planning poses a challenge for finance minister Philip Hammond who wants to snap Britain out of its long-term productivity malaise by spurring business investment.

British consumers have been squeezed by higher inflation caused by the fall in the pound after the Brexit vote, and weak wage growth, aggravating a decade-long rise in levels of personal insolvency.

The chart below compares wage growth in real terms against the number of individual voluntary arrangements (IVAs) - a type of insolvency short of bankruptcy - during each quarter in England and Wales.

While much of the recent sharp increase in IVAs reflects changes to regulation and the consumer debt market in mid-2016, there is a clear link between falling wages in real terms, and financial distress among consumers.

Tourism in Britain has been a winner from the Brexit vote. The fall in the value of the pound made the country a more attractive destination for foreign tourists while also encouraging British holidaymakers to stay at home.

However, the boom faded somewhat in the three months to September as growth in the number of overseas visitors slid to a one-year low.

Currency moves seem to have been a big factor. Visits from North America fell 5 per cent in the year to September, reflecting a weaker US dollar. But visits from the EU rose 4 per cent as the euro strengthened further against the pound.

Last week Bank of England Chief Economist Andy Haldane said a combination of a strong global economy and the weakened pound had "worked its magic" on Britain by skewing economic growth toward trade rather than consumption.

Share if you like

Filter By Topic