GROWTH PICKS UP BUT BREXIT FEARS LOOM LARGE

Although the UK economy recently recorded its fastest rate of growth in almost a year, Brexit-related uncertainties continue to cast a shadow over future growth prospects.

Data released by the Office for National Statistics (ONS) shows that gross domestic product rose by 0.6% during the May–July period boosted by an increase in consumer spending thanks to the unusually hot weather and England’s strong World Cup performance. This was the highest growth rate since August 2017 and marks a distinct pick-up compared to the 0.4% figure posted in the three months to June.

The latest data was significantly more positive than most economists had predicted and suggests the economy is on track for a solid third-quarter performance. However, while there may be  few signs of an imminent Brexit-induced slump, most commentators still believe the economy could be set for a more stormy period as Brexit-related uncertainties act to constrain growth.

Indeed, the potentially dire consequences of a disorderly Brexit are increasingly coming to the fore. The IMF’s latest assessment of the UK economy, for instance, warns that a ‘no-deal’ Brexit would entail “substantial costs” and also concludes that the challenges in securing a Brexit deal remain “daunting”. This pessimistic view of Brexit negotiations was subsequently vindicated at the EU Salzburg Summit with Donald Tusk’s rejection of Theresa May’s ‘Chequers’ proposals. The apparent impasse, along with continuing Tory internal Brexit divisions and a number of potentially hazardous parliamentary hurdles, suggest that Mrs May’s chances of delivering an orderly Brexit may not be particularly high.

While the full ramifications of a no-deal Brexit are impossible to accurately predict, it is clear that such a scenario is likely to have severe negative consequences for the UK economy. At the moment, Brexit is therefore clearly casting a long shadow over the country’s growth prospects.

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.

It is important to take professional advice before making any decision relating to your personal finances. Information
within this document is based on our current understanding and can be subject to change without notice and
the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored
investment advice and is for guidance only. Some rules may vary in different parts of the UK.

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