Experts predict output to rise 0.4 percent between July and September, as the economy bounces back from a weak second quarter, when it declined 0.2 percent. The improvement in the economy’s performance will be driven by the UK’s dominant services sector, which account for 81 percent of total economic output (GDP). Growth in the third quarter means that the economy avoids going into a recession at a critical moment in the electoral race.
However, the good news has been tempered by Bank of England warnings last week that the UK economy still faces serious challenges from a deteriorating global outlook and the continuing effect of Brexit uncertainty on business and household spending.
The delay to Brexit looks set to dampen growth once again in the final quarter, although economic prospects are expected to improve once Brexit is completed.
Investec economist Victoria Clarke expects “an outturn not far above zero” for the final months of the year, while Oxford Economics’ Martin Beck said a slower 0.2pc advance in the final quarter would mean growth of 1.3pc for the year overall – the weakest since 2009.
Brexit uncertainty has been at the heart of the economy’s wildly fluctuating fortunes during 2019.
Initially stockpiling by firms in preparation for a March 29 exit date boosted economic growth by 0.6 percent.
But as a result of delays to Brexit, firms reined in their spending, thereby slowing economic output.
In a busy week for economic news, the Office for National statistics will publish data on job numbers on Tuesday.
The figures are expected to show unemployment rates holding steady at 3.9 percent with wages up 3.8 percent on the year.
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At the same time, analysts expect price inflation to drop to 1.6 percent in Wednesday’s Consumer Price Index release, in good news for consumers.
Meanwhile, a leading financial expert has warned that there could be an exodus of major business leaders in the event of a Jeremy Corbyn government.
Nigel Green, chief executive of the deVere Group, one of the world’s largest independent financial advisory organisations, made his remarks after Prime Minister Boris Johnson compared Mr Corbyn to Joseph Stalin, former leader of the Soviet Union, over his “hatred” of wealth creators.
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Mr Green said: “Whilst I wouldn’t have used the language employed by Mr Johnson, through his anti-business rhetoric, and high tax and low-profit policies Jeremy Corbyn does routinely take swiping broadsides at the wealthy.
“I believe we can realistically expect a Corbyn government would trigger an exodus of the country’s most successful and wealthiest individuals who contribute significantly both directly and indirectly to the British economy.
“Soaking the rich doesn’t work because these people, typically, have the resources to move to lower tax jurisdictions if the tax burden in the UK becomes too great.
“They are internationally mobile.
“Should these largely job and wealth-creating individuals emigrate – and according to our anecdotal evidence a high number very well could – government finances will suffer considerably because they contribute a disproportionately large amount to the state’s coffers.”
Mr Green adds: “It would also likely deter top international talent and investors from coming to the UK too, which would negatively impact long-term, sustainable economic growth prospects.”
“If Mr Corbyn is serious about having the better-off pay more tax, they should cut rates further and allow them to become wealthier.
“This would incentivise top achievers, who prop-up ‘The System’, to remain in the UK.
“However, I suspect that implementing this economically-sound philosophy would be political suicide for Jeremy Corbyn.”
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