UK Economic Growth Weakens on Exports, Foreign Tax Evaders

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.”

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.”

The study, by the British Chamber of Commerce, sees businesses facing pressured profitability in the face of weak revenue growth. Surveying over 8,500 companies in the country, the report saw that domestic sales and orders have fallen on a year-over-year basis, suggesting the country could be facing deflation and massive layoffs.

“While the picture is static overall, there are clear indications that economic growth is continuing to soften,” said Adam Marshall, Acting General Secretary of the BCC, adding that sales, orders, confidence, and investment intentions were all weakening.

In a separate study, the Bank of Scotland found that that country’s economy is weakening. The central bank’s PMI noted a decline in activity due to “harsher business conditions”. For March, Scotland’s PMI fell to 48.5, indicating a contraction of activity even worse than February’s 49.2 reading. The energy sector led the declines.

Oil-dependent Scotland saw its GDP rise 0.2% in the first quarter, which some economists warn could fall into actual recession by the second quarter if oil revenues do not improve quickly, and the rising income ripples throughout the economy.

England saw one of the highest GDP growth rates in Europe and in the western world, with 2.3% year-over-year growth in 2015, although much of that growth was the result of a rising current account deficit—7% of GDP—as a result of weaker manufacturing exports.

This is partly why UK Chancellor George Osborne has cautioned that Britain should avoid considering leaving the European Union, which could make it a less competitive exporter. “Today’s figures expose the real danger of economic uncertainty and shows that now is precisely not the time to put our economic security at risk by leaving the EU,” he said.

Meanwhile, foreign direct investment into the UK has exacerbated the current account deficit. The recently released Panama Papers documented London’s tremendous reliance on the world’s mega-wealthy to purchase properties in London, causing that city’s real estate prices to skyrocket.

Acknowledging the problem—although he was also implicated in the scandal—Prime Minister David Cameron said that the UK needs to affect change to avoid being a “safe haven for corrupt money.”

Currently, £7 billion ($10 billion) worth of properties were linked to Mossack Fonseca companies, suggesting they may have been used as a place to park assets to dodge taxes in other countries.