Here in the UK, Brexit has become a daily diet, preoccupying the headlines, public opinion and business decisions, as everyone tries to understand the implications, both personally and economically. Just this morning the headlines focused on UK-EU freedom of movement and how a new immigration system will be in place in the UK by March 2019. Meanwhile, as the terms for the UK’s exit from the EU are still being thrashed out, Britain’s latest economic data appears to be looking up. The UK economy grew by 0.3% in Q2, driven in part by the growing film industry, which is a pick up from Q1, when it was 0.2%. Admittedly this is a more sluggish growth rate when compared with other G-7 economies, but for the least – it is in the right direction. Notwithstanding, the economy is experiencing a notable slowdown, and when looking at the underlying trend, these positive figures appear less favourable, given Brexit uncertainties and inflation pressure on household budgets. The reality is that this year has seen continental Europe and many emerging market economies accelerating, which means Britain is missing out. The release of the latest economic data reversed an earlier advance in the pound against the dollar. Expectations of monetary tightening by the Bank of England, which is expected to be announced at the central bank’s next policy briefing on 3 August, have diminished. This is further hurting the pockets of households as the cost of imports increases in part forcing consumer spending to be cutback. Higher levels of inflation and the business industry struggling with heightened Brexit uncertainty, has left the international trade secretary with no option but to support interim arrangements to minimize disruption after UK’s exit in 2019 and to ensure that any transitional arrangements with the EU after Brexit, end by the next general election in 2022. It’s understood that the UK would be leaving the single market as EU membership is inextricably linked, which means new trade agreements will have to be negotiated. Interestingly the EU has quite clearly stated it would only make new trade agreements with countries that sign up to the Paris climate change accord! Since the US has said it wants to leave this, the whole UK government’s strategy on a one-off trade deal with the US becomes a little more complex. US President Donald Trump has been vocal recently promising “very big and exciting” trade deals with the UK after Brexit, even though no deals can be done until the UK’s withdrawal in March 2019. Currently more than 15% of UK’s goods export go to the US, the largest percentage for a single country, that said, a whopping 47% of the UKs goods go to the 27 European countries collectively. The President is eager to quickly seal a bilateral trade deal between the two countries but clearly the UK has a lot to navigate through before reaching any new deals.
