09 May 2017
The British Chambers of Commerce have released their monthly economic review, which sets out key domestic and international economic indicators for business. May’s review states that the UK is entering a ‘challenging period’, due to rising inflation that presents a problem for both consumers and businesses.
The BCC have previously called on the government must return a suitable Brexit deal for UK businesses, but also suggest in this report that more needs to be done to tackle longstanding domestic issues, such as the rising financial burden of upfront business costs.
The economic review centres around key indicators the first of which being growth. Overall, the initial estimate of UK GDP for the first quarter of 2017 supports the BCC’s view that the UK economy is becoming subdued. With a growth rate of 1.4%, the UK economy is experiencing the weakest rate of growth since 2012.
There is also concern over inflation and earnings, as the cost of living is rising annual earnings have slowed putting a squeeze on spending, which is a key driver of UK growth.
In the three months prior to February 2017, the number of people in employment rose by 39,000 and the number of people out of work decreased by 45,000. The rise in annual earnings slowed from 2.4% to 2.2%, and with consumer price inflation sticking at 2.3%, prices are now growing faster than earnings for the first time in three years.
In terms of trade, the UK trade deficit widened by £3 billion due to a £0.3 billion rise in imports and a £0.4 billion decline in exports. The BCC claim that trading conditions for UK exporters will improve in the near future as a weaker pound and improving global economy boost demand for UK goods and services. However, this improvement will be limited due to the rising costs of imported goods and raw materials.
In contrast, the economic outlook for the Eurozone has improved notably over the last 12 months, boosted by anti austerity policies and the European Central Bank’s ( ECB) stimulus programme.
The outlook for the US and Chinese economies is strong and both are expected to experience continued growth.