(Newswire.net — April 19, 2017) — Households in Britain are warned that living standards would be tightened as Brexit takes place in the near future. The official prediction was that of a quick downturn after the UK Brexit referendum. This did not happen and some think that the economy will not be hit because of it. However, it seems that only a slowdown happened as people from around the world do not actually believe that the UK will leave the EU.
At the moment, UK inflation is at the highest level in the past 3 years. Retail sales are going down and pay growth significantly slowed down. The real estate market had a slow downturn that is now recovering and the pound did fall ever since the referendum, with strong tax receipts being what helped public finances.
The two vital economic factors that are going down are Inflation (it keeps rising and February was the high point) and pound value (down 16%). The UK economy is heavily reliant on imports. If Brexit happens there will be problems that will have to be solved.
When it comes to living standards, a very important factor is food price. Consumers are paying more for most groceries. Food price deflation ended and the pound has a direct impact on the price of imported foods. Prices for various groceries also hit high values because of southern Europe bad weather affecting crops. Iceberg lettuce, for instance, almost doubled its price and supermarkets were forced to impose restrictions on how many lettuces a customer could buy.
Wage growth did not reach the expectations. Similarly to the lower growth in Brazil, as highlighted by compareemcasa.com.br, in January 2017 wage growth slowed down at 1.7%. Combine this with inflation and pound depreciation and household finances are faced with a rising pressure. Families are starting to seriously consider extra income sources like getting a part time job. Good economic news is not expected in March or April because the UK Brexit vote only now starts to have the expected major negative impact. Slowly, according to most specialists at the moment, things are getting worse.
There are many uncertainties that lie ahead. Businesses and consumers will react to Brexit but it is not known how this will happen. The OBR predicted a growth that is going to be much slower than what was initially thought, being at a rate of 1.6%. Consumer and business surveys handled by third party organizations showcased that companies are worried about higher costs and shoppers are worried about rising prices.
February retail sales in UK slowly rose but when analyzing the last 3 months, they are faced with the weakest performance seen in 7 years. Households in UK are the most downbeat when looking at finances since the year 2013. While retail sales rose, manufacturing and services sectors were faced with slower activity because of higher costs.
On the whole, prices going up and the pound going down as the Brexit process is anticipated can drastically hurt UK economy. The front of the problems will be felt by households as they will not be able to afford as much as in the past.