UK growth is expected to be sluggish for the next few years even if a Brexit deal is secured, according to the National Institute of Economic and Social Research (NISER).
In a report released yesterday, the think tank lowered its estimate for growth this year to 1.5 percent from 1.9 percent, and said output will pick up only slightly to 1.7 percent next year and 2021.
“It’s not a collapse in the economy, but certainly there is a slowdown,” Amit Kara, head of UK macroeconomic forecasting at NISER, told reporters in London. “There’s still going to be a period of uncertainty which will probably last for at least a year. It’s only then when we’ll know the exact relationship and that’s when the cloud of uncertainty will lift.”
NISER’s central forecast is based on a scenario where the UK leaves the EU at the end of next month with an exit deal in place, leaving the economy limping along even if its most pressing barrier to growth is resolved. A more chaotic outcome could see investment tumble, pushing growth even lower, the think tank said.
With the UK scheduled to depart the EU in less than two months, British Prime Minister Theresa May’s government has yet to get her exit plan through Parliament. That uncertainty has led to weaker business investment, while a depreciated pound has not bolstered exports as much as expected, Kara said.
Still, low unemployment should continue to boost wages and help consumers, he said. If the UK leaves the EU with a deal, the Bank of England will likely raise interest rates in August, and continue to do so by 25 basis points every six months until the end of next year when bank rate reaches 1.5 percent, according to the NISER report.
On Tuesday, financial information firm IHS Markit said its “all-sector” purchasing managers’ index, which incorporates gauges of manufacturing, construction and services activity, dipped to 50.3 points last month from 51.5 the previous month. Were it to fall below 50, it would be indicating a fall in output.
“The survey results indicate that companies have become increasingly risk averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty,” IHS Markit chief business economist Chris Williamson said.
Though the survey takes a snapshot of only one month, it provides a steer as to the economy’s momentum. The Bank of England, for example, watches the survey as it assesses it monetary policies.
The Bank of England is to announce a monetary policy decision and update its forecasts for growth and inflation today, the same day May next goes to meet EU officials in Brussels.
Additional reporting by AP
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last