- Britain’s economy is weaker because of Brexit, the Bank of England said today.
- “Uncertainties associated with Brexit were weighing on domestic activity, which had slowed even as global growth had risen significantly.”
- Growth in Spain, for instance, is twice that of the UK right now.
LONDON — The Bank of England didn’t mince words today on the effect of Brexit on the British economy. “Brexit-related constraints on investment and labour supply appeared to have been reinforcing the marked slowdown,” the central bank wrote in its inflation report.
The BOE added that while Britain was being held back by Brexit, the rest of the world was heading into a period of strong growth. “Uncertainties associated with Brexit were weighing on domestic activity, which had slowed even as global growth had risen significantly,” the bank said.
Business investment is being affected by uncertainties around Brexit”
Here is the detail:
“GDP grows modestly over the next few years at a pace just above its reduced rate of potential.”
“… Business investment is being affected by uncertainties around Brexit, but it continues to grow at a moderate pace, supported by strong global demand, high rates of profitability, the low cost of capital and limited spare capacity.”
“The decision to leave the European Union was already having a noticeable impact on the economic outlook. The overshoot of inflation throughout the forecast predominantly reflected the effects on import prices of the referendum-related fall in sterling. Uncertainties associated with Brexit were weighing on domestic activity, which had slowed even as global growth had risen significantly. And Brexit-related constraints on investment and labour supply appeared to have been reinforcing the marked slowdown that had been increasingly evident in recent years in the rate at which the economy could grow without generating inflationary pressures. Monetary policy could not prevent either the necessary real adjustment as the United Kingdom moved towards its new international trading arrangements or the weaker real income growth that was likely to accompany that adjustment over the next few years. It could, however, support the economy during the adjustment process.”
The bank’s assessment will likely be interpreted as more anti-Brexit bias by critics such as MP Jacob Rees-Mogg. “Mark Carney is one of the enemies of Brexit. He has opposed it consistently,” Rees-Mogg told the BBC recently.
The data, however, tell a clear story. GDP growth in the UK has slumped since the 2016 referendum vote, but it has soared in the rest of the eurozone. They show Q3 GDP in the UK at 0.4% (q/q) and declining, while EU growth is at 0.6% and trending upward. Spanish GDP growth is 0.8% — twice the rate of the UK.
Europe is speeding ahead, and Britain is being left behind, basically.
- Q3 GDP growth (q/q)
- UK: 0.4%
- Eurozone: 0.6%
- Spain: 0.8%
This is Britain’s GDP growth over time, showing a declining trend particularly after the EU Referendum in June 2016.