5 Reasons the UK Economy is Slowing

Whatever Tuesday’s first quarter GDP figures show, the next government should brace itself for a hard landing, according to an economics thinktank.

A report produced by the New Policy Institute (NPI) has described Britain’s economy as “unbalanced” and warns that another recession is inevitable unless various issues are addressed.

Despite the fastest economic growth among advanced economies last year, most City analysts expect the UK to have lost steam in the opening months of this year. The consensus forecast is for quarterly growth to come in at 0.5%, down from 0.6% in the fourth quarter of 2014, when the first official estimate of GDP is published on Tuesday morning. Some economists see the growth rate halving to 0.3%, according to a Reuters poll.

Beyond the latest quarter, the NPI’s experts see several reasons to believe the UK economy is closer to the end of a period of growth than to the start of a sustained recovery.

In their report entitled Beneath the Bonnet: How Sound is Britain’s Economic Recovery? the thinktank looks at headline indicators and conclude that unless imbalances are addressed “another recession is a matter of ‘when’, not ‘if’”.

1. ‘Productivity has barely grown’
2. ‘Weakness behind the employment headlines’
3. ‘Household income has not recovered’
4. ‘Imbalances abound’
5. ‘The coalition scaled back its plan on the deficit’

via The Guardian

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza