How Brexit uncertainty is hurting the UK economy in four charts

Each day the UK politics and obviously, Brexit faces new drama which is playing havoc with the economy of the UK. You can measure the extent of recession risk the UK is facing by going through the following four points. And it seems that the only way to put an end to all uncertainties is by developing another referendum in markets and by plaguing investment.
  1. Fall in the Pound
Imports become expensive with the weaker pound. As a result, the price of a no. of consumer goods touches the sky causing inflation. The Bank of England had published a report, predicting the rate of inflation to drop to 1.56% from 2.1% by the year-end. Until the third quarter of 2020, it will remain less than the 2% inflation target. But, considering the recent happenings, Mark Carnery, the governor of the bank, estimated that it could become more than double to 5.5%. This is why the Bank of England faces a tricky situation.
  1. Uncertainty
Be it be with a deal or without a deal, all Boris Johnson wants is to deliver Brexit. But the uncertainty related to Brexit policy seems to be on the rise which is, in turn, ruining the UK economy. Similarly, as in the year 2016, uncertainty is on spike again. Now you must be wondering how is it measured? The only way is through the discussion of policy uncertainty across about 650 UK newspapers. Through this discussion, the consumer and business economy can be measured. With the rise of uncertainty, the level of confidence declines.
  1. Financial Stress
UK financial stress indicator is a reliable predictor for measuring UK’s growth development. It gathers information from the volatility of the equity market, exchange rate, bond market and the risk that the investors want to hold UK corporate bonds instead of holding less risky UK govt. bonds. Seeing from the historical view, the rise in financial stress causes reduced growth of the UK turning it negative. However, the recent data about financial stress doesn't point to a future decline of the UK.
  1. Risk of Recession
As per the government, data suggests, during the second quarter of 2019, the UK economy shrunk by 0.2%. Such a decline in the economy could be noticed when there are two negative quarters of GDP growth. It isn't an instant development, the money growth has been weakening significantly which is a reliable predictor of UK's GDP growth. The third quarter of GDP growth is expected to be as bad as it was in the second quarter of 2019.
How Brexit uncertainty is hurting the UK economy in four charts How Brexit uncertainty is hurting the UK economy in four charts Reviewed by Newzpot on 00:30:00 Rating: 5
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