Britain's Economy Stays Under Brexit Pressure
The UK's economic growth slowed significantly after voting for an exit from the EU in 2016. The British economy was the weakest Group of Seven economy in 2017 in terms of overall growth. The estimation of GDP growth in the UK following the results of 2017 has been revised downward to 1.7%, which is the minimum increase since 2012. Preliminary data indicated GDP growth of 1.8%. In the fourth quarter of 2017, the UK economy grew by 0.4% compared to the previous three months, according to the revised data from the Office for National Statistics (ONS). A preliminary estimate indicated an increase of 0.5%.
The weakening of the pound sterling after voting for Britain's withdrawal from the EU led to an acceleration of inflation. It hit the British consumers, but at the same time served as an incentive for exports. The contribution of trade to GDP growth in 2017 was 0.4%. Trade contributed to the annual growth for the first time since 2011.
British consumers were squeezed due to higher inflation caused by the fall of the pound after the vote in Brexit, as well as weak wage growth. Consumer spending began the 2018 at a slower pace, falling for the eighth time in the last nine months, as the British continued to cut costs. Consumer spending fell by 1.2% in January compared with the same month in 2017.
On Friday, British Prime Minister Theresa May will speak about relations with the European Union after Brexit. Last week, the Brexit committee approved David Davis's proposal "Canada plus plus". In accordance with this plan, the UK will seek to negotiate a free trade agreement with the EU, similar to Canada, but then try to improve it by providing better access to a single market for goods and services through close regulatory cooperation.