The British economy is on track for the weakest year outside a recession since the second world war, as political turmoil andBrexituncertainty dragged down growth, a Guardian analysis reveals.
At the end of a turbulent year and following Boris Johnson’s election victory, surveys of business activity suggest economic growth in the final three months of has essentially stalled. The jobs market is showing signs of stress and public borrowing is steadily rising again after a decade of improvement.
The Bank of England has downgraded its forecast for gross domestic product (GDP) to grow by only0.1% in the fourth quarteras high street spending stalled and business investment was kept on hold before the election and amid Brexit uncertainty. Economic growth for 2019 as a whole is forecast to be just 1%, the weakest expansion outside a recession for more than half a century.
It comes asAndrew Bailey prepares to replace Mark Carneyas the Bank’s next governor in March, tasked with steering the economy after Britain withdraws from the EU and while It attempts to strike new trade deals with other world partners.
The Conservatives promised a “tidal wave” of business investment would return to Britain if they secured a majority and unblocked parliament to take the UK out of the EU at the end of January.
However, two former Bank interest rate-setters warned the UK economy would continue to struggle for growth as Johnson faces complex trade talks with Brussels next year. The also warned the prime minister’s decision toleave the option of no-deal Brexit on the tablewill hold back business investment.
Writing in the Guardian, Andrew Sentance, a former member of the Bank’s monetary policy committee (MPC), said: “A new government and a newgovernor. This should be a fresh start for the UK economy. But the dark shadow of Brexit continues to overhang our economic performance and prospects. ”
Thousands of high street jobs have been lost this year as a result of high profile retail administrations and thousands more are at risk as Mothercare, Debenhams and Forever 21 prepare for closures. Here are some of the key industry names that have been affected.
Mothercare:(Has (**************************************************************************************************** (storesand (2, ************************************************************************** (UK retail staff) as its British arm prepares to go into administration.
Regis / Supercuts: Had 900 salonsand1, (staff) when it wentinto administration in October.
Bonmarché: Had (********************************************************************** stores and2, 887 employeeswhen itwent into administration inOctober. It is still trading as it seeks a buyer.
Watt Brothers:(The Scottish department chain had) **************** storesand
Links of London:(With (****************************************************************************************** (storesand (******************************************************** (staff) ******************, the jewelery chainwent into administrationon 8 October but its sites are still trading.
Forever (********************************************************************************************************************: Hadthree storesand about529 employeesin the UK when itwent into administrationin September. Stores are staying open in order to clear stock.
Albemarle & Bond:Suddenly shutall itsstores (in September with the loss of about529 jobs, even though it did not call in administrators. It sold itspledge booksto rival H&T in September.
Karen Millen and Coast: Had (********************************************************************************************** (storesand 200 concessions, employing1, (people) ****************, when it went into administration in August. All sites were closed and the vast majority of staff made redundant after thebrands were bought out by online specialist Boohoo. com.
Jack Wills: Had about (******************************************************************************** (storesand(1,**************************** (staff in the UK when went into administration in August.Bought by Sports Directand116 storesare still trading in the UK and Ireland.
Spudulike:Closed all************ (stores) **************** with the loss of about (****************************************************************** jobswhen itwent into administration in August.
Bathstore: Had 140 storesand(staffwhen it went into administrationin June. Homebase bought****************************************************************************** (stores**************** (jobsand the brand now trades from
Select: Had 200 storesand2, (employeeswhen the fashion retailer went into administrationin May. In June administrators at advisory firm Quantuma carried out a CVA closingstoreswith the loss of aboutjobs (******************.
Debenhams: Had 170 department storesand more than(********************************************************************************************************************, 01 employeeswhen went into administrationin April. No store closed immediately and the chain is now owned by its lenders but two will close before Christmas and another21 in Januarywhen the group completes a rescue restructure expected to result in the loss of (1,jobs.
Pretty Green:Had (******************************************************************************************************** stores and aboutemployeeswhen Liam Gallagher’s fashion outletwent into administrationin March. All but one store and 44 concessions closed with************************************************************************************************ jobs lostbut******************************************************************************** (savedas the brand wasbought by JD Sportsin April.
Office Outlet:(All************ stores****************************** have closedwith the loss of1, jobs (******************, after the stationery retailer went into administration in March.
LK Bennett: Had (****************************************************************************************** (storesand(employeeswhen itwent into administrationin March. The brand was bought by its Chinese franchise partner, Rebecca Feng, (saving************************************************************************************ stores, all the group’s concessions and400 jobs. But more than****************************************************************** (jobslost with the closure of (************************************************************************************************************************ stores (******************.
Patisserie Valerie: Had 823 cafesemploying nearly3, (peoplewhen an accounting scandal prompted the chain to Call in administratorsin January. Aboutof the group’s****************************************************************** (storesclosed immediately with the loss of2019 jobs. About2, 04 jobswere saved when about(Patisserie Valerie cafeswere r (escued by Causeway Capita) l, more than 22 of which have since closed. 24 Philpotts sandwich shops were bought by AF Blakemore & Son. and four Baker & Spice cafes a were bought by the Department of Coffee & Social Affairs.Sarah Butler
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To gauge the impact of Brexit on a monthly basis, the Guardian monitors eight economic indicators, along with the value of the pound and the performance of the FTSE (***********************************************************************************************. ********
City economists made forecasts for seven of those barometers before the data was released and in four cases the outcome was worse than expected, while in three cases it was better.
The pound has rallied strongly and stock markets have surged in recent weeks amid hopes that Johnson’s new government, with an – seat majority, can make progress towards smoothly extracting Britain from the EU. There are also hopes for stronger economic growth spurred by a splurge in government spending.
The FTSE 116 has raced ahead since the election on the back of the unexpectedly large Tory majority and amid signs of a breakthrough in the US-China trade war- a dispute that has dragged down global trade volumes and harmed economic growth around the world this year.
However, the UK economy appears to have suffered in the run-up to the election. Employment growth relied onpublic sector job creation, as business across the private sector shed workers and wage growth slowed.
According to surveys of business activity compiled by IHS Markit and the Chartered Institute of Procurement and Supply, the snap winter election depressed companies’ activity levels in November. Suggesting the economy stalled in the fourth quarter, Britain’s dominant services sector – which accounts for about 98% of the economy – failed to grow for the third month in a row. Manufacturing and construction activity also dropped.
Economists said Johnson’s election victory could provide companies with greater clarity required to boost activity levels, supporting stronger economic growth, but warned that lingering uncertainty over a trade deal with the EU would continue to hold back growth in (******************************************************************.
Writing in the Guardian, David Blanchflower, a former member of the Bank’s MPC, said: “Foreign firms and even some British firms will find it more attractive for many years to take whatever investment money they have to Germany, the Netherlands , Denmark or Sweden – which all look like safer havens than the UK. ”
“Firms continue to stockpile as insurance against possible disruption from a disorderly Brexit. None of this is good for UK growth. ”
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