UK: Sluggish pace of expansion - Rabobank

Yesterday’s release of the second estimate of the UK Q2 GDP report confirmed a sluggish 0.3% q/q pace of expansion and the breakdown highlighted a weakening in both consumption and investment activity, both of which have also been emphasised by other data, explains the research team at Rabobank. 

Key Quotes

“Consumption is being impacted by the drag on spending power caused by higher inflation while there is evidence that political uncertainty connected with Brexit is delaying or re-directing investment decisions.  The BoE currently expects that investment in the UK will be 20 percentage points lower in 2020 than it had forecast before last year’s EU referendum.”

“The Office of National Statistics also reported yesterday that UK net migration hit a 3 year low in the year to the end of March.  The result, which is also being linked with the Brexit vote, has caused some employers’ groups to warn of potential shortages of skilled workers.”