Throughout the years, we have been accustomed to a children song that tackles about the collapse of London Bridge. Fast forward to 2017, there is a new victim of a sudden breakdown. Same place – London – but different casualty – this time, it is the UK economy.
Wrecking Ball
If there is a culprit behind putting the UK economy in the brink of a collapse, it is the controversial decision of the country to leave the European Union, known as Brexit. The shocking vote produced a wrecking ball of uncertainties in the overall economy of Great Britain.
Business output has declined dramatically despite a slight growth seen in the employment sector in the first three months of this year.
The national currency, British pound, has been hitting series of record lows. It has become a perfect fit for its name as it continued to be pounded, losing more than 10% versus the US dollar since the vote.
The consumer spending in the country registered its worst quarter in four years, spurred by higher prices, which sent major sectors such as distribution, retailers, and restaurant crashing back to earth.
Lastly, the service sector, which is representing a big bulk in the economy, has had sluggish performance in the previous months, down to 53.4 in July from 53.8 in the previous month.
Brexit has allowed UK economy to lose its momentum. Furthermore, the inconclusive result of the snap election has added more pressure to the already struggling economy.
Overall, in the first quarter of 2017, the UK economy logged a slowed growth of 0.2%, lower than the first estimate of 0.3%.
Back in 2008, when the world suffered the global financial crisis, the Great Britain relied heavily to its consumer spending and services sector to inject life to its economy. Now that both sectors are down, how can UK withstand another storm from the formal Brexit process?