The british economy remained surprisingly dynamic in 2016 with a growth of 2.0% in spite of the decision and the shock of leaving the european Union, but the entry in the heart of the matter of the Brexit fears of a slowdown this year. This first estimation of growth of gross domestic product by the Office of national statistics (ONS) shows that the activity has more or less kept at a steady pace, just below that of 2015 (to 2.2%).
above all, this performance is a very honourable is well above the expectations of most economists when the British voted in a referendum to exit the EU on 23 June – a decision that was from the point of view of these economists lead to a confidence shock to be immediately harmful. “All major sectors of the economy have grown over the past year, which once again proves its strength”, immediately welcomed the british Finance minister, Philip Hammond.
The country’s economy has even been growing a little more vigorously than that of Germany (+1.9%) and without a doubt much more than that of France, whose growth could reach 1.2% according to the Insee. Mr. Hammond acknowledged, however, that there was “uncertainty coming at a time when defines a new relationship with Europe”. “But we are ready to seize all opportunities to create a competitive economy that works for everyone”, he assured.
Negotiations for release
The First minister Theresa May announced last week the release ahead of its countries in the european single market in the framework of the Brexit, adding want to conclude a trade agreement with the EU to replace it. It has to activate by the end of march article 50 of the Lisbon Treaty which will open the negotiations of output between London and Brussels, which could last two years.
In the meantime, these are still the services that have almost entirely supported the activity british in the fourth quarter during which the growth was down to 0.6%, driven by the sectors of distribution, hotels and restaurants, finance and travel.
manufacturing also has increased somewhat, but the ONS stressed that it had been boosted by a one-time increase of orders in the pharmaceutical industry. A drop of the oil and gas extraction related to the shutdown for maintenance of a vast oil field in the North sea has hindered the growth.
No immediate impact on consumption
“The economy continues to surprise by its force, (it) has not been damaged so far by voting to leave the EU,” said Ben Brettell, economist at Hargreaves Lansdown. The data released Thursday are preliminary and may be revised in two later publications of the NSO, “but it is difficult not to interpret these figures as a good news for the british economy”, which is now well above its pre-crisis level of 2008 and “continues to appear in the head of the pack of advanced economies,” added Mr Brettell.
The British were not intimidated by the consequences of their vote for the Brexit and continued to eat as if nothing had happened, leaving to incur more debt in a context of rates still lower.
almost all of the analysts warns, however, that the British could have eaten their white bread, at a time when the sharp depreciation of the pound post-referendum begins to raise the prices of many imported food products. “The fundamentals for consumers are only beginning to deteriorate, inflation will nibble away their purchasing power,” says Howard Archer, economist at IHS.
The propensity of companies to continue investing in the country will also be crucial this year, in a context rendered uncertain by the huge size and complexity unprecedented upcoming trade negotiations between London and Brussels. On Thursday, the federation of car manufacturers found that the professionals in the sector had already reduced by one-third their investments in 2016.