The pressure on the pound from Britain’s vote to leave the EU is stoking inflation, denting household finances and putting a brake on spending, according to a Guardian analysis.
Official figures this week are expected to confirm the economy enjoyed a strong finish to 2016 as companies and consumers continued to shrug off the shock of the Brexit vote. But signs of a spending slowdown, corporate jitters around the triggering of article 50 and rising prices point to a more challenging growth outlook in 2017.
Seven months on from the referendum, the Guardian’s monthly tracker of economic news shows the weaker pound is being felt in the real economy more keenly than ever, as it raises the cost of imports such as energy and food and that gets passed on to consumers as higher prices in the shops.
To gauge the impact of the Brexit vote on a monthly basis, the Guardian has chosen eight economic indicators, along with the value of the pound and the performance of the FTSE.
The dashboard for January shows a worse than expected performance in four of the eight categories. Two were better than expected and unemployment was as expected. Inflation was higher than economists had forecast, hitting its highest level for more than two years in December.
Writing in the Guardian, a former member of the Bank’s monetary policy committee (MPC), Andrew Sentance, said two factors pointed to economic growth losing momentum: a slowdown in employment and rising inflation.
“For now, consumer spending and strong global growth are supporting the UK economy – and we have yet to see the negative impact on investment which many forecasters are expecting in 2017,” said Sentance, a senior economic adviser at the consultancy PwC.
