Britain’s Economy is Not as Shaky as Recent Reports Claim
When Britain’s decision to leave the EU was announced, the Treasury and others were quick to predict the collapse of Britain’s economic performance. Those in favor of Brexit have been incredibly pleased with what is actually happening in the economy. Not only have the forecasts proved wrong, some are claiming that Brexit might actually help the economy for various reasons. For example, it has the potential to open up other opportunities.
Recent information on the state of Britain’s economy supports this, pointing out that the economy is not doing as poorly as some reports make it sound. Indicators and data point released in April and early May are responsible for the concerns over the UK economy; they were not only below expectations, some were truly shocking. The following are just a few of those data points:
- Q1 GDP Growth – 0.1%, compare to a forecast of 0.3%.
- Manufacturing PMI – 53.9, a 17-month low.
- Services PMI – 52.5, a little better than in the previous month, but much lower than expectations.
After reviewing the current data, Oxford economics have shed some light on the economy by saying that forecasts have definitely been “overdone” recently, and that economic doom is not part of the UK’s future. Oxford’s lead UK economist commented on the situation early this month.
“Much of the subsequent media commentary has argued that these results suggest we are unlikely to see much of a rebound in GDP growth in Q2 and that the UK economy is in the midst of a sustained slowdown,” Andrew Goodwin, Oxford’s lead UK economist said on Friday.
“But we are unconvinced and see a number of reasons, both related to the data and the wider economic backdrop, which suggest that the gloom that has been increasingly enveloping the UK economy has been overdone.”
Goodwin also explained that the official data, which was released by the ONS, and the data from surveys (e.g. CIP and Markit) do not match up. He used manufacturing and construction sectors as an example, showing that these sectors reported much stronger survey results than what the official data listed. He also argued that the CIPS surveys could be underplaying the strength of the UK economy, since there is no PMI for the retail sector; this is an area where strong growth is expected to take place in the next few months. Goodwin noted that consumer spending should also improve.
“More generally the backdrop to consumer spending is clearly improving, with lower inflation and firmer wage growth bringing an end to the real income squeeze, an unambiguously positive development given the degree to which the UK economy relies on consumer spending to drive GDP growth.”
For ecommerce and retail merchants, this is great news. Between the growth expected in retail and consumer spending and the increase in small business financing options, the future looks bright for small businesses. Alternative providers’ – like Best Payment Providers – internet merchant account UK have also increased the efficiency and security of payment processing for merchants, so they can take advantage of opportunities and offer customers multiple payment options.