1) INFLATION DROPS
In the UK, inflation hit a two-year low of 1.8% in January, below the Bank of England’s 2% target. A recent cap on energy bills, and falling clothing costs, were the prime factors.
In America, inflation is rising at a 19-month low of just 1.6%. Drivers benefited from cheaper gasoline, with consumer prices unchanged in January.
The fall means real incomes in Britain are continuing to rise (after a long trough when wages didn’t keep pace with prices).
Economists predicted that inflation could remain subdued, unless a hard Brexit causes sterling to plunge.
Stock markets are rallying, after president Trump hinted that the deadline for a US-China trade deal could be extended.
Wall Street has just opened higher, while Britain’s FTSE 100 has reached a four-month high.
2) DECLINE IN BRITAIN’S EU WORKFORCE
The number of workers in the UK from elsewhere in the EU fell by 61,000 at a time when the number of British and non-EU workers soared, official figures show.
There were an estimated 2.33 million workers from the EU27 in the UK between October to December in 2017, but that figure dropped to 2.27 million a year later.
It contrasted with an increase in the number of non-EU workers in the UK, rising from 1.16 million to 1.29 million in the same period.
Labour MP Rosie Duffield said, “EU citizens work in our hospitals, our schools and our businesses. They are our friends, our neighbours and our families. No one voted for a Brexodus of EU citizens who contribute greatly to our economy and to our public services.”
The uncertainty over Brexit means it is no surprise that thousands of EU nationals have left Britain over the past year, and that fewer people want to come here to contribute to our society and our economy. Brexit is already damaging our NHS, our universities and industry and means less money for public services.
3) BREXIT: ECONOMIC RETROGRESSION
The cost of Brexit to the British economy is running at £40bn a year and a damaging no-deal scenario could force an emergency cut in interest rates.
Gertjan Vlieghe, a member of the Bank’s monetary policy committee, said that since the vote in June 2016, the economy had lost about 2% of GDP compared with a scenario where there had been no significant domestic economic events.
The cost to Britain is currently £40bn a year, or about £800m a week of lost income, he said. Since the referendum, the UK’s economic growth has slowed while the rest of the world has recorded one of its strongest periods for growth of the past decade.
Vlieghe’s estimate for the weekly cost of Brexit so far is more than double the £350m the Leave campaign claimed could be saved on EU membership fees and instead spent on the NHS. The claim, emblazoned on the side of the campaign’s battlebus, became a key focus for debate in the run-up to the vote.
Vlieghe said in London on Thursday: “That 2% of GDP is not trivial, that’s £40bn or if you prefer it in bus units, it’s £800m a week.”
The Bank has calculated that the cumulative total of lost GDP since 23 June 2016 is £55bn.
He said business investment in Britain had been stuck around zero, with a drop of 3.7% in 2018, despite an upswing worth about 6% annually in the rest of the G7. Consumer spending also slowed as households came under pressure from higher prices, sparked by the sharp fall in the value of the pound straight after the Brexit vote.
Commercial Awareness Director