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Specialising in the politico-economic risk analysis of the Commonwealth’s member states, we have created our own economic indicator for the UK economy which, otherwise, does not exist in this comprehensive form: the UKES. It consists of two components constituting the main index.
The component “expectations” runs ahead of the current situation, comprising elements such as development of inflation and interest rates, consumer- and business confidence, etc. The “state” component describes the current situation and comprises data such as industrial production, net trade, etc. The main index, then, is a smoothed combination of the two components.
+++1 November: Economic sentiment deteriorates further as main indicator line gets stuck at the neutral threshold+++
The UK economy is losing steam by the month, with no end in sight. By comparison to the last update of our UKES, now each and every indicator on the stats board below the chart is chalking up either neutral or negative numbers, with a particular decline in business sentiment as measured by the CBI industrial trends statistic, and a services sector still stagnating around zero growth. If it weren’t for consumers, the economy were almost certainly to experience its second quarter of contracting GDP in a row, thus marking a technical recession. Meanwhile, the contribution of net trade to economic output has worsened even further, with business investment failing to show any sign of recovery. Hence, the main indicator line of the UKES has become stuck at the neutral threshold around zero points, while the expectations component has steepened its drop into negative values, now down and below the levels reached directly after the Brexit referendum in 2016. With Brexit uncertainty now being prolonged by the scheduled snap election, the UK economy will have to fight very hard indeed to stave off a mild recession over the turn of the year.
Services PMI (Nov)
Business confidence (Nov)
GDP growth (Q3)
Individual country ranges according to historic max-/min levels
Sources: US Bureau of Economic Analysis, US Bureau of Labor Statistics, US Census, Australian Bureau of Statistics, Instituto Brasileiro de Geografia e Estatistica, Customs General Administration of China, bloomberg, Institut national de la statistique et des études économiques (INSEE), UK Office of National Statistics (ONS), Trading Economics