Consumers would face a further squeeze on their purchasing power caused by both sluggish incomes and rising prices for goods and services. Business investment would be undermined by Brexit uncertainty, including lingering major questions about how the U.K. will interact in the future with its major trading partner, the European Union. And exports, while they face a better outlook due to currency depreciation, would not be large enough to effectively act as a powerful locomotive of growth for the economy as a whole.
U.K. economy could come under pressure
After holding up impressively well in the immediate aftermath of the June 2016 Brexit referendum, the U.K. economy is coming under pressure. Economic growth has slowed notably, wages are stagnating and inflation has marched up toward 3 percent, the highest among the major advanced economies. With this combination in play, it is just a matter of time until the (up-to-now solid) “soft” indicators, including business and household confidence, come under pressure.
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