Eurozone Growing Twice As Fast As The United Kingdom Economy
The United Kingdom’s economy made its slowest start to a year since 2012, while in comparison the Eurozone has grown twice as fast (thus far) in 2017.
The UK economy made its slowest start to a year since 2012, while in comparison the Eurozone has grown twice as fast. In the three months leading up to June of 2017, the UK grew by a tepid 0.3 per cent while the EU expanded at a much healthier 0.6 per cent. In the first six months of 2017, the United Kingdom’s economy grew at an annualised rate of 1 per cent; this is less than half the average growth rate of about 2.5 per cent in the years leading up to the Brexit vote.
In the eyes of financial and investment analysts, the Sterling tells a deeper story of the county’s separation. As the UK’s economy sputters, and the Euro steadily gains ground as part of a broad recovery under way since 2014, the pound has fallen to its lowest levels in eight years. There is hope the drop in sterling can make Britain’s manufacturing sector more competitive as their products become cheaper for foreign buyers. Even so, manufacturing only accounts for 10 per cent of the United Kingdom’s economy.
The country’s economic slump boosted inflation to 2.6 per cent in July 2017 and the Bank of England expects the cost of living to rise further; forecasting the consumer price index to increase to 3 per cent by October 2017. Earnings increased at a rate of 2.1 per cent in June 2017, failing to match the rate of inflation and meaning a 0.5 per cent drop in investment value and real income. Thankfully there are signs that inflation could be coming close to its peak, after failing to rise as much as expected in July of 2017.
Contrast the picture with Europe, where production is racing ahead. The most recent Euro-zone purchasing managers’ index — a key barometer of economic growth — came in better than its equivalent measure in the UK for the fourth straight month in July 2017. Moreover, economic confidence is at its highest level in a decade.
Despite the recent sluggish performance of the United Kingdom’s economy, the country’s economists expect an improvement in the second half of the year (2017).