Andrew Sentance

Senior economic adviser at the PwC consultancy and member of the Bank’s monetary policy committee from 2006 to 2011

This year is turning out to be one when it is hard to determine the underlying trends in the economy due to the weather and special events. In the first quarter of the year, bad weather was a significant dampening effect. More recently, however, warm weather and the World Cup appear to have provided a consumer spending boost.

How has the Brexit vote affected the UK economy? July verdict Read more

While retail salesfigures disappointed in July, across the April to June quarter they were strong. The quarterly rise in the volume of retail spending – 2.1% – was the strongest recorded for over three years. The quantities of goods purchased on the high street, in petrol stations and on the internet was 2.8% up on a year ago, the biggest annual increase since early last year.

The GDP tracker published by the National Institute of Economic and Social Research points to 0.4% quarterly growth in the second quarter of this year, after 0.2% in the first two quarters. PwC’s latest projection for economic growth in 2018 as a whole is now 1.3%, which would mark the weakest year of calendar growth since the financial crisis. If this forecast is realised, 2018 would be the weakest year for GDP growth since 1962, outside of periods of recession. That is despite favourable economic conditions in our major trading partners in Europe and the US, and around the world more generally.

Economic growth should pick up to around 1.6% in 2019, but next year is likely to be the seventh year of UK GDP growth below 2% this decade. Brexit has combined with the financial crisis and sluggish productivity to produce the weakest two decades of economic growth, the 2000s and 2010s, that we have seen since the second world war.

Brexit economy: rate rise looms amid signs of slowdown Read more

The unemployment rate remains low, at 4.2%, but reductions in unemployment have slowed sharply over the past couple of years. Meanwhile, inflation remains above the Bank of England’s target at 2.4%, only just above wage growth. So we will continue to be in an uncomfortable position in the UK economy for a while yet as uncertainty about the Brexit outcome persists, and possibly intensifies.

David Blanchflower

Professor of economics at Dartmouth College, New Hampshire, US, and member of the Bank of England’s monetary policy committee from 2006 to 2009

I have been in Canada in the last few days and people are astonished at Brexit and kept asking me whether the British government has any clue what it is doing. The answer to that question seems to be a resounding “no”.

The Brexit shenanigans continue to increase market uncertainty. The pound, which is 10% below its pre-referendum level, hit a 10-month low after Boris Johnson and David Davis quit the government over the Brexit vision outlined by Theresa May at Chequers. Brexit is the biggest downside risk to the UK economy, bar none. But it also doesn’t help that there is a potential global trade war on the horizon which will also potentially lower GDP.

Neither inflation nor wages show any sign of taking off. Inflation unexpectedly remained at 2.4% in June, despite petrol prices rising to the highest level in four years, heaping pressure on the Bank of England to delay an interest rate rise in August. The Office for National Statistics (ONS) said the falling price of clothing as shops staged their summer sales was among the main factors offsetting the rise in petrol prices.

The rate of pay growth for British workers dropped to the lowest level in six months in the three months to May, despite figures showing record numbers of people in work across the country. The ONS said average weekly earnings rose by 2.5% on the year in the three months to May, slowing down from the previous three months when they grew by 2.6%.

With Brexit and new tariffs pushing down on growth it has hardly been surprising that economic data over the course of the past month has been weakening. That means there is no basis once again for the MPC to raise rates at its next meeting, as in none, but they still might. That would be a major error they would likely have to quickly reverse so they need to keep their powder dry. I’m still looking for lots of good news; I don’t see any this month.