UK economy in 2018 worse than in 2012. How will the pound behave?

The British economy went into decline in the last three months of last year, which resulted in the growth in 2018 to be the weakest in the last six years. Overall, growth rates fell to 1.4 percent compared with 1.8 percent in 2017. Exports are suffering from the weakness of the global economy and both consumers and businesses are increasingly concerned about the lack of a deal to leave Britain from the EU. Last week, the Bank of England lowered its growth forecast by 0.5 percentage points to 1.2 percent this year, which will be the weakest since the 2009 recession.

Less than seven weeks are left before Britain should leave the EU and Prime Minister Theresa May is still not able to enlist the support of Parliament. Business investment in the fourth quarter fell by 3.7 percent compared with last year, which was the biggest drop since 2010. Household expenditures, which unexpectedly strongly boosted economic growth in the middle of the year, remained stable by 1.9 percent more than a year ago. In general, investments in business were stalled after the referendum in June 2016. The Bank of England expects business and housing investment to decline this year, while export growth will be halved. For the pound, it’s hard to call as good news. The currency, which literally not so long ago was able to get rid of political pressure, has again found itself under the weight of unresolved issues by politicians.


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