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Britons feel consequences of Brexit

There is still momentum in the British economy, but the growth rate has slowed and British real wages have fallen. On the other hand, the weak pound has helped British companies in export markets.

The British economy grew by 0.4 per cent in the third quarter, and by 1.5 per cent over the past year. However, the country’s growth rate has been halved since 2014. There is still great uncertainty regarding the access of Danish companies to the UK market following Brexit.

“The British economy kept its momentum going in the third quarter but is expected to experience a five-year low in 2017. The slowdown in the British economy comes in the wake of the Brexit referendum and stands in stark contrast to the rest of Europe, which is experiencing increasing growth,” says Senior Analyst Allan Sørensen, the Confederation of Danish Industry.

“There is still momentum in the British economy, but they are feeling the consequences of Brexit in the form of lower growth and falling real wages. Even though unemployment is at its lowest in over 40 years, consumer confidence has taken a dive and is significantly below 2014 and 2015 levels,” says Allan Sørensen.

The pound decreased drastically in value in the wake of the Brexit referendum last summer and has remained weakened. That means increased prices on imported goods and a rise in inflation. Consumer prices have increased by 3 per cent over the past year.

“The British manufacturing industry and export companies have regained a competitive edge because of the weak pound. There is therefore growth in British exports, and the number of tourists has increased by over 7 per cent over the past year,” says Allan Sørensen.

“The UK is one of our greatest export markets, and the state of its economy is therefore highly significant, as are the trade conditions our companies face when entering the UK market. There is still great uncertainty as to how trade with Britain will take place after Brexit. It is important that Danish companies can continue to do business in the British market with as few obstacles as possible,” says Allan Sørensen.

Danish companies had exports worth DKK 75 billion to the UK last year. Those exports secure more than 55,000 jobs in Denmark distributed across many sectors.
They are feeling the consequences of Brexit in the form of lower growth and falling real wages.
SENIOR ANALYST ALLAN SØRENSEN
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PUBLISHED: 11/1/2017 LAST MODIFIED: 11/1/2017