Great Britain and the Brexit

The back and forth in the Brexit process has caused great uncertainty in the UK in recent months. On the other hand, the British economy still achieved decent growth in the past quarter. With a plus of 0.3% compared to the previous quarter, the country not only avoided a recession sovereignly. GDP growth in the third quarter also slightly exceeded the quarterly result of the EMU and that of Germany probably even exceeded it quite significantly. And this despite the fact that the previous year’s growth rate of 1.0% was recently as low as it has not been for almost a decade: despite the threat of Brexit, the United Kingdom is far from being the worst performer among the G7 countries.

A closer look, however, reveals the slowdown that the Brexit uncertainty has meanwhile left behind. In August and September, the economy shrank across almost all sectors. The relatively good result for the summer quarter is therefore mainly attributable to strong growth in July, which in turn benefited from special effects. British exports benefited from anticipated foreign demand and made by far the largest contribution to economic growth. However, the weak investment activity, which will probably only stagnate this year for the second time in succession, is worrying. Outside the construction sector, investments are even shrinking significantly.

Nigel Farage has announced that his Brexit party will not run in 317 conservative constituencies. This has significantly increased the likelihood that Boris Johnsons will finally be able to implement his „last-minute deal“ after the new elections in December. Britain would then leave the EU at the end of January 2020. However, if the planned transition phase is maintained, according to which the country will remain in the EU’s internal market and customs union until the end of 2020, the tremor is likely to begin again soon. We therefore do not expect the British economy to grow by more than 1% in the coming year either.

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