Howard Archer, chief economic advisor to the EY ITEM Club, is not too optimistic about the prospects for the economy over the next few months:
He says: “Survey evidence largely points to the economy getting off to a lacklustre start to the starting off the third quarter with retail sales soft and the manufacturing and construction sectors struggling, although there was seemingly a limited pick-up in services activity.”
The economy would pick up if the UK leaves the EU with a deal on 31 October, Archer predicts.
But if no-deal happens:
“We suspect major uncertainty would negatively impact business sentiment and investment, and also affect consumers (albeit to a lesser extent).
“Trade would be substantially affected as non-tariff barriers kicked in. The impact of changes in tariffs is harder to judge as the Government has indicated that, under a temporary scheme, 87% of imports by value would be eligible for zero-tariff access compared to 80% of imports currently being tariff free. Meanwhile, supply chains would be affected by any disruption at ports.
“A sharp drop in sterling is likely with a ‘no-deal’ Brexit; this would provide help to UK exporters but it would also push up businesses’ costs and consumer price inflation, thereby hitting households’ purchasing power.”
