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the stagnation of the British economy

14 Feb 2020

Brexit and the stagnation of the British economy

Before we begin to speak about the stagnation of the British economy, we will sum up what is Brexit for you. In case you do not know, the United Kindom just left the European Union. The measure will have several implications for both international organizations. While the EU will suffer from social and economic changes, the UK is expecting to have its economy improved. According to Brexit defenders, UK’s marriage with the EU was complicated and not beneficial.

However, when it comes to the status of the British economy post-Brexit, we cannot see the benefits of the divorce either. Actually, Britain’s economy stagnated in the final quarter of 2019. Of course, this is due to several factors. Among them, we can stress the importance of political uncertainty, Brexit worries, a slowing eurozone and trade tensions. We can securely state that the last quarter of 2019 was not an easy period for Europe. Many countries suffered from their economies slowing down or not growing enough.

the stagnation of the British economy
Understand what is behind the stagnation of the British economy! (Source: Financial Times)

The stagnation of the British economy

With respect to the UK, it was reported that the GDP flatlined in the period that comprehends October-December. However, while But while the economy shrank by 0.3% in November, it also presented a growth of 0.3% in December. Thus, what we understand of the stagnation of the British economy is that it shrank only to grow afterward. Actually, this is a better result than many other countries within the Eurozone experienced. France, for instance, saw its economy to slow down by 0.1% when the UK presented an increase of 1.4%.

Specifically speaking, during the referred quarter, the services sector grew by 0.1%. However, industry shrank by 0.8%, what was not a surprise considering that it has been declining since the beginning of 2019. Moreover, business investment shrank 1%, something that is strictly related to Brexit. Many firms were deterred from investing in new offices and machinery while the separation was happening.

Finally, we observe that the stagnation of the British economy is not alarming considering other European economies. As we previously mentioned in other posts, countries like France and Italy are facing much worse scenarios. For an organization that just suffered a major change in an enormous trade deal, the stagnation is not the best, but it is not the worse. In order to continue reading articles about the global economy and finances, do not forget to check our remaining blog posts!

Source: The Guardian