UK economy growing slowly with latest GDP estimate at 0.4%
Brexit good news is easy to find. Just lower your expectations.
A preliminary estimate for UK GDP in the third quarter of 2017 shows the economy grew at 0.4%, slightly higher than the previous quarter’s 0.3%. And as the Independent reports, 0.4% is better than market expectations. So you could say this is good news for the economy.
The Guardian’s business live blog reports the chancellor Philip Hammond welcomed the news saying: “It’s a solid performance by the UK economy in the third quarter and it’s outperformed market expectations as the UK economy has done overall since the referendum last year.”
This is true. But it’s also true that the UK is growing more slowly than it has since 2012. Compare GDP growth this quarter to the same quarter last year and the UK economy only grew at 1.5%. The last time it grew this slowly is 2012. And the Guardian reports this could actually be the weakest growth for the economy since the financial crisis because the 2012 figures are distorted by the London Olympics.
Within the data, whilst both the services and manufacturing sectors showed growth, the construction sector contracted for the second quarter in a row. The construction sector is in a recession.
Comparing UK growth to other countries is also less encouraging. As this tweet by Economist Intelligence Unit analyst Danielle Haralambous shows, the UK’s annual growth rate is sliding in contrast to the US and Eurozone.
— Danielle Haralambous (@DHaralambous) 25 October 2017
And in a recent report, the IMF said the UK was the “notable exception” to growth in advanced economies. So whilst growth in other advanced economies has maintained momentum, the same cannot be said for the UK since the vote to leave.
Writing in the Guardian, Duncan Weldon, the head of research at the Resolution Foundation, said Brexit is only making things harder for the UK. He said: “Increased uncertainty over the UK’s future trading relationships, regulations and migration policy have led many firms to put investment on hold.” The UK already has a productivity problem, which will only be hampered by delayed or reduced investment. And despite record employment figures, wage growth has slowed.
0.4% is good news given expectations were worse. You could also say Brexit is good because it hasn’t resulted in armageddon. Perhaps what Brexit means is that we should all just lower our expectations for the UK.