Money There's a coming storm set to 'batter' the UK economy — and it has nothing to do with Brexit

23:26  11 november  2017
23:26  11 november  2017 Source:   businessinsider.com

`Stop Messing About': Beer Mats Spell Out `Brexit Manifesto'

  `Stop Messing About': Beer Mats Spell Out `Brexit Manifesto' Tim Martin, boss of cheap-and-cheerful pub chain JD Wetherspoon Plc and an outspoken supporter of the U.K.’s departure from the European Union, has turned his attention from getting any Brexit to getting the right Brexit. Lovers of Wetherspoon’s inexpensive beer and budget thousand-calorie English breakfasts will be greeted by a “hard-hitting message on Brexit” when they look down at coasters awaiting them in the chain’s 895 U.K. pubs, the company said Wednesday.The message, printed on 500,000 mats, calls on the leaders of the U.K.

× There ' s a coming storm set to ' batter ' the UK economy — and it has nothing to do with Brexit . LONDON — Brexit has been the main focal point of discourse around the UK economy over the last year or so.

There ’ s a coming storm set to ‘ batter ’ the UK economy — and it has nothing to do with Brexit . As a result, they end up taking a long time to get to where they need to go. A new feature will now allow drivers to set a specific time they need to be somewhere else, up to two times a day.

  There's a coming storm set to 'batter' the UK economy — and it has nothing to do with Brexit © GettyRising oil prices will drag on the British economy, creating a further headwind for the already weak UK.

  • The recent $10 per barrel increase in Brent crude "will subtract 0.2% from nominal GDP, provided that net consumption remains at the 2016 level."
  • UK economy already suffering thanks to Brexit's impact on the pound and the wider investment landscape.


LONDON — Brexit has been the main focal point of discourse around the UK economy over the last year or so.

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Brexit has very clearly had a negative impact on growth and the UK's position in global growth standings.

The pound has slumped, inflation has shot upwards (hitting its highest level in over five years last month), real wage growth has stagnated, and GDP growth has slowed significantly.

All of these negatives, if not solely caused by the vote to leave the EU, have certainly been exacerbated by Britain's impending exit from the bloc.

But, according to analysts at Pantheon Macroeconomics, there's a fresh headwind coming to slow down the UK economy, and for once it has absolutely nothing to do with Brexit.

FILE PHOTO: Used oil barrels are stacked at a storage facility in Seattle, Washington February 12, 2015. REUTERS/Jason Redmond© Provided by Business Insider FILE PHOTO: Used oil barrels are stacked at a storage facility in Seattle, Washington February 12, 2015. REUTERS/Jason Redmond "The recent surge in the oil price has added to the headwinds set to batter the economy over the next year," Samuel Tombs, Pantheon's chief UK economist wrote in a note dated November 8.

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Oil prices have rebounded to their highest levels in over two years in the past month, hitting $64 per barrel this week, largely driven in the short term by political strife in Saudi Arabia, which has filtered through create concerns about possible disruption in the world's second largest oil market.

Watch: What the Saudi corruption crackdown means for oil (Bloomberg)

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This, Tombs argues, is bad news for Britain's already fragile economy. Effectively, Britain is a net consumer of oil — meaning it uses more foreign oil that it can produce itself.

"Britain has been a net consumer of oil since 2006, because production from ageing, depleted oil fields in the North Sea has plunged," Tombs writes.

"A mini-revival in production since 2014, facilitated by investment during the period of triple-digit oil prices, has done little to close the shortfall with consumption. The U.K.'s net consumption of oil amounted to 584 million barrels in 2016, as our first chart shows."

Here is that chart:

Screen Shot 2017 11 09 at 10.33.34© Provided by Business Insider Screen Shot 2017 11 09 at 10.33.34

Tombs estimates that the increase of $10 per barrel in Brent crude oil in recent weeks "will subtract 0.2% from nominal GDP, provided that net consumption remains at the 2016 level."

That's because oil prices are acutely felt by consumers — the great drivers of the UK economy.

"The pain of higher oil prices will be felt swiftly by consumers; motor fuel prices respond to changes in crude prices with a lag of just three weeks," Tombs argues.

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While the vote on Brexit may not be coming until 2017, campaigning by both the in and the out camps is already well under way. Quote: “Britain has nothing to fear from Brexit ”. As an independent UK we can control all the levers of our economy and support industries, relax our exchange rate, protect

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Not only will consumers be hit, but the Brexit driven revival in the UK's manufacturing sector will also take a bashing from the increase in oil prices. Manufacturing has been boosted by the drop in the pound since the vote, as foreign importers buy more goods from the UK at knock down prices.

Oil's rise, however, could end that renaissance.

"Our second chart shows that the jump in oil prices is consistent with year-over-year growth in manufacturing output declining to about zero next year, from 2.8% in September," Tombs says.

Here is that chart:

Screen Shot 2017 11 09 at 10.33.39© Provided by Business Insider Screen Shot 2017 11 09 at 10.33.39

Not only will Britain have to contend with the economic uncertainty Brexit has caused going forward, but so too will it have to cope with the negative impact of more expensive oil.

Tombs is not all doom and gloom, however, noting that in theory "higher oil prices—if sustained—should encourage firms to switch to less oil-intensive means of production and they should incentivise households to consume services instead of goods."


The UK Sun lashes out at Leo Varadkar, says he should 'shut his gob on Brexit and grow up' .
The Sun’s editorial comment came following strong words from Varadkar at a European Union summit in Sweden yesterday. The Irish leader raised the issue of the border between the UK and Ireland, saying more progress needed to be made before the Brexit negotiations could move on to the next phase.Doubling-down on Ireland’s position that more work needs to be done before phase two of the Brexit talks, Varadkar said Ireland wants any kind of physical border “off the table” before that.

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