Foreign investors love Britain, but Brexit would kill the vibe. According to new research colleagues and I have conducted at the Centre for Economic Performance, leaving the European Union could lead to a fall in inward foreign direct investment into the UK of close to a quarter. This would damage productivity and could lower people’s real incomes by more than 3%.
No one can feign surprise that the Bank of England kept policy steady. Nor was the 9-0 vote truly surprising, though there had been some speculation that of a couple of dovish dissents. Nevertheless, there are two important takeaways for investors.
The United Kingdom is seeing a weaker manufacturing sector, pressuring workers’ wages even as house prices continue to skyrocket and basic goods and services see accelerating inflation.
Voters across 40 police force areas in England and Wales will go to the polls next month to choose their next police and crime commissioner (PCC). This is the second round of such elections. The first cohort of 41 PCCs were elected in November 2012 against a backdrop of widespread fears about the “politicisation” of the police. As a result, turnout was extremely low (at 15.1%) and in a significant minority of contests “independent” PCCs triumphed over those standing on a party ticket.
Indicators of weakening conditions in the United Kingdom are alarming economists, who believe the country’s reliance on rising housing prices may be setting the country up for an economic collapse.
A new survey of businesses in the United Kingdom shows that corporations are seeing weaker confidence and investment, both of which have fallen to “a low ebb.”
Migration and the principle of free movement within the EU is one of the main issues in the debate over whether Britain should remain in the EU. Polls suggest that the public is very sympathetic to the idea that the UK should restrict immigration and that it is the source of numerous problems. But why is this? In addition, are these fears justified?
After a rollercoaster week for Britain’s chancellor, his eighth budget has been approved. George Osborne will be breathing a sigh of relief. After proudly announcing his budget on March 16, things began to unravel just 48 hours later, thanks in part to the shock resignation of the work and pensions secretary, Iain Duncan Smith.
The furor over plans to cut disability benefits brought about a farcical backtrack on the issue and an effective rewrite of large parts of the Budget. This script could have easily formed part of an episode of the political satire The Thick of It.
An ill-conceived strategy undermined by mismanagement and bad fortune is increasing the risks that the UK votes to leave the EU in June. Nearly everything that could go wrong has gone wrong for UK Prime Minister Cameron.
If UK Chancellor of the Exchequer Osborne wants to position himself to be the next Prime Minister, the budget to be unveiled tomorrow may not be particularly helpful. There is little room to relax fiscal policy, given the self-imposed constraints.
The deficit for the current fiscal year was projected to be GBP73.5 bln, but through January, the deficit has been GBP66.5 bln. This suggests the deficit will be closer to GBP80 bln. The budget deficit was 4.4% of GDP last year, down from 5.5% in 2014 and 10.4% in 2009.
A growing number of economic indicators are pointing to worsening economic conditions in the UK, causing the British pound to fall further in value. The services Purchasing Managers’ Index fell to 52.7 in February, according to Markit Economics. The decline follows consistent weakness in services demand throughout the country, and is far below expectations of a 55.1 reading. In January, the PMI reading was called “disappointing” by Markit and several economists, although it was far above current levels at 55.6.
