Daily Management Review

Brexit Uncertainties Have Not Deterred Britain Keeping Its Economy At A Steady Growth Path


02/12/2018




The most recent report on the economic performance of the United Kingdom clearly indicates a steady growth despite the uncertainties associated with Brexit.
 
According to figures from the National Institute of Economic and Social Research (NIESR), there has been a 0.5 per cent growth in the U.K economy in the three months up to the end of January.
 
Following a period of stunted growth in the first half of 2017, there had been a pickup in the economic activity picked in the second half of the year according to a report by the NIESR whch is an independent London-based economic think-tank.
 
The report said that both the manufacturing and the service sectors drive the second half recovery of the British economy and drew support from a resilient global economy. However, there was a continued dip in the construction output.
 
"Growth is stable. We have been at that level for a few months now. A good ending to 2017 has helped," Amit Kara, head of British macroeconomic forecasting at the NIESR, said.
 
According to the NIESR, there would be close to 2 per cent growth in the U.K. GDP in 2018 which is according to expectations for long-term growth trends for the economy. However, it would not be possible for the U.K. economy to exhibit the kind of productivity that it had shown earlier according to some economists.
 
One of the reasons attributable to this is the lowering of the rate of growth that can be sustained by the economy without causing it to overheat.
 
The 1.8 percent growth rate for the economy for 2018 is almost good enough that can be handled by the British economy after the financial crisis without running into any trouble according to Kara.
 
"That is pretty close to the maximum it could grow at. The new maximum is now about 1.75 percent, because of Britain's lower productivity performance," said Kara.
 
The rate of sustainable unemployment for the economy was gain lowered recently by the Bank of England (BoE) even as the rate of unemployment is currently a record lows while the employment rate is at record highs.
 
However, there is uncertainty of demand exceeding supply resulting in inflationary wage pressures.
 
"We don't see wage growth yet and there are risks around wage growth. If wages start growing without productivity then the party is over, that is the biggest fear," said Kara.
 
"We have had some stronger data in Q3 on productivity but it is too early to tell. We have been hammered down in the past 10 years."
 
Kara said that the economic growth forecast of NIESR is in line with the quarterly inflation report issued by the BoE.
 
(Source:www.xinhuanet.com)






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