Canada's economy grew 0.9 percent in the period, followed by Germany (0.6 percent), Japan (0.5 percent), and France (0.4 percent and the US (0.3 percent). The UK's woeful performance ranks it alongside Italy, with 0.2 percent expansion in the first three months of the year, and is a far cry from a mere year prior, when it outpaced Germany, Japan and the US.
UK GDP growth per capita was virtually zero in Q1, and overall output per head is barely above pre-crisis levels. pic.twitter.com/i2euQ0aZkh— Jamie McGeever (@ReutersJamie) May 25, 2017
The UK's stuttering economy may well be a symptom of wider issues caused by Brexit — if so, it is but one indicator among many. For instance, Office for National Statistics figures indicate inflation soared unexpectedly to its highest level since September 2013, 2.7 percent. The rise is largely attributable to slumping sterling since the June 23 2016 referendum. As of June 2017, the pound has declined by around 13 percent against the dollar.
A weaker currency means prices must be raised to compensate, or indeed products must be subject to "shrinkflation" — an item reducing in size but its cost remaining the same. For instance, Maltesers sharing bags were 121 grams prior to the plebiscite, but have since fallen to a paltry 103g. Family packs of Fish Fingers have likewise been reduced from 12 to 10 fingers per box.
In April, the Consumer Price Index was up from an annual growth rate of 2.3 percent in March and higher than the 2.6 per cent expansion analysts had forecast. Core inflation, which does not include more volatile prices (such as those for energy and food), also jumped 2.4 percent, up from 1.8 percent previously — the biggest annual increase since March 2013.
There's every indication inflation will continue to rise too, which will not be offset by a rise in wages. In fact, wages are suffering from the "Brexit" effect themselves — while nominal average wages grew by an annual rate of 2.4 percent in the first quarter of 2017, when considered in tandem with inflation figures, wages are actually falling in real terms, with growth scheduled to hit negative in 2017 for the first time since 2014. This bodes ominously for consumer spending, the key driver of UK economic growth since the 2008/9 Financial Crisis.
The UK is also facing a severe labor shortage — and already suffering the initial inklings of such a crisis. In its annual report on immigration to the UK, published February, the ONS noted that in the three months following the referendum, migrants from many European countries living in the UK fled the country. In particular the number of Eastern Europeans leaving the UK rose by almost a third, to 39,000. Also that month, it was revealed the UK government had rejected around 30 percent of applications from EU for permanent residency since the referendum. The shortage of EU workers is felt most palpably in sectors such as accountancy, cleaning and computing.
Moreover, many fear this dearth is but the tip of the iceberg — in April, a UK National Federation of Self Employed and Small Businesses report suggests 59 percent of small businesses with EU workers are worried about accessing people with the right skills, and 54 percent angst over growing their businesses, once Brexit is actually enacted, specifically due to the impact of seceding on access to EU migrant workers.
Some (more) evidence of the UK's growing (and partly Brexit-related) skill-shortage problem, via the latest Markit/REC Report on Jobs… pic.twitter.com/4aFHyPLIof— Peter Leonard (@adresources) May 9, 2017
The May REC Report on jobs, based on a comprehensive survey of recruiters, also showed the availability of permanent and temporary candidates fell at the fastest pace in 16 months in April — and vacancies have risen "markedly," with respondents noting a shortage of suitable applicants for more than 60 different types of role. Around 38 percent of firms surveyed reported a lower number of permanent candidates available in the month, in every region of the country. The most rapid expansion of vacancies was documented in the south of England.
Nationwide's house price data analysis also showed a fall of 0.2 percent in May, following hot on the housing heels of April's 0.4 percent drop. This slightly exceeded economist consensus. The bank attributed the fall to the collapsing pound stifling demand. Data from the Bank of England also shows mortgage lending grew by US$3.47 billion (£2.7 billion) in April, the lowest figure since April 2016. In all, 64,645 home loans were approved in April, the lowest monthly figure since September, and below economists' forecasts.